10 Reasons Why You Struggle to Build Substantial Savings — And How You Can Turn This Around

Saving can be a real challenge, and it’s an issue facing people across income levels. Many people have big goals, whether that’s owning a home, planning for retirement, or building a rainy-day fund, yet they struggle to save enough to reach them. So, why do people often find themselves living pay-check to pay-check, and what can be done to make savings goals a reality?

Here, we’ll take a practical look at why substantial savings can feel so elusive and explore actionable steps to get on track.

1. Lifestyle Inflation

One of the biggest challenges to saving more is lifestyle inflation, where spending increases as income does. If you’ve ever felt like you could manage comfortably on a certain salary, only to feel stretched when your income went up, lifestyle inflation is likely the culprit. Higher earnings can lead to larger homes, pricier cars, more travel, and, consequently, higher living costs. Often, lifestyle inflation sneaks up slowly, as small adjustments add up.

Ever got a pay raise and felt like you should have extra money, but somehow you don’t? That’s lifestyle inflation—when spending increases as income grows

Solution: To curb lifestyle inflation, make a conscious effort to live below your means. Aim to save a set percentage of any pay raise rather than absorbing it into new expenses. Instead of automatically increasing spending with each raise, set a rule, for example: Save at least 50% of every pay increase. If you get a £200 raise, bank £100 of it before you even notice it. Also, automate savings so that a percentage of your pay-check goes straight into a separate account.

2. The Debt Trap: Unnecessary Debt Will Get In The Way Of Your Savings

High-interest debt is a significant barrier to saving. Too much debt and savings don't get along well. Credit cards, personal loans, and buy-now-pay-later schemes can create a cycle where most of your income goes towards repayments rather than saving. Even with small monthly payments, the interest can quickly add up, leaving people with less disposable income for saving.

Solution: Begin by focusing on paying down high-interest debt. Tackle this by prioritizing debts with the highest interest rates first or consolidating them into a lower-interest option, if possible. Every pound that goes toward debt is a pound that can’t be saved, so freeing yourself from interest payments can make saving much easier.

3. Lack of Financial Literacy: Not Knowing Where to Start

In many cases, people struggle to save because they don’t fully understand the value of compounding interest or how different savings vehicles work. Without the knowledge of how even small amounts can grow over time, it’s easy to feel like saving a little now isn’t worth it.

Solution: Start small. Even £20 a month can grow into something significant over time. Invest time in financial education- use available online resources to learn the basics of investing and interest growth.

Even starting with basic books on personal finance can go a long way. By understanding the impact of compounding, for example, you’re more likely to feel motivated to save, knowing your money will work for you over time. Seeing numbers add up gradually, can also be motivating.

4. The Pressure to Keep Up: Social Influence and Peer Pressure

It’s easy to feel pressured to match the spending habits of peers or to indulge in the latest trends and gadgets. Social media has only intensified this, often portraying a highlight reel of high-consumption lifestyles. This can lead to a “keeping up with the Joneses” mentality, where spending choices are motivated by what others are doing rather than personal financial goals.

Solution: Shift focus from comparison to personal goals. Ask yourself: Will this purchase bring long-term happiness? Having a clear vision of what you’re working toward can make it easier to resist the urge to spend for appearances’ sake. Create a vision board of what you actually want—whether it's financial freedom, early retirement, or a dream trip—and remind yourself why short-term sacrifices are worth it.

Engaging in communities with similar financial goals, like online personal finance forums, can also provide positive reinforcement.

5. Unclear Savings Goals: Lack of Defined Purpose

Saving without a specific goal often results in lower commitment and motivation. When there’s no clear purpose or timeline attached, the urge to save dwindles, making it easier to divert funds to short-term desires instead. A vague “I should save more” isn’t inspiring enough to stick to. Without specific goals, money tends to disappear into everyday spending.

Solution: Set clear, realistic goals with timelines. Whether it’s saving for a vacation, a new car, a down payment, or retirement, having specific objectives makes it easier to prioritize savings.

Get specific- For instance, instead of “I want to save for a house,” say:

• "I will save £500 per month for the next 18 months to reach a £9,000 deposit."

• "I will put away £200 per month for the next 2 years for a dream vacation."

6. Irregular/Inconsistent Income Patterns

Freelancers, contractors, and gig workers often struggle with inconsistent incomes, which makes setting aside a regular amount each month challenging. Even those with regular jobs may face periods of reduced hours or unexpected expenses that eat into their ability to save.

Solution: Set a baseline savings goal for low-income months and increase contributions when income is higher. Building a buffer account can also help to even out inconsistencies. Aim to save more aggressively during high-earning months to cover leaner periods without tapping into core savings.

7. Underestimating Small Expenses

Small, frequent purchases—coffee, takeaways, snacks—can add up significantly over time. Often, these expenses go unnoticed, making it harder to realize where money is slipping away. Many people refer to this as “lifestyle creep,” where small luxuries become normalized parts of everyday life.

Solution: Track daily expenses over a month and review where money is going. Apps like Monzo can categorize spending and highlight areas for improvement. Consider setting a weekly cash budget for these smaller expenses. When the cash runs out, it’s a natural reminder to stay within your limits.

8. A “Now” Mindset

The modern culture of instant gratification can be at odds with the concept of saving, which often requires long-term thinking. If you’re used to immediate rewards when you feel like it (E.g. ordering food, buying online, upgrading gadgets), waiting months or years for savings to pay off can feel 'boring'.

Solution: Start small to build a habit. Try “paying yourself first” by setting aside a small, manageable amount each month. Once the habit is established, increase the contribution. Regularly visualize your future goals and think about the long-term rewards that outweigh temporary satisfaction. You can also set up a “treat fund” on some savings Apps where you save up for something fun without dipping into long-term savings.

9. Lack of Emergency Savings: Needing a Cushion for the Unexpected

When unexpected expenses arise without a dedicated emergency fund in place, people often dip into savings or rely on credit. For example, A little car breakdown, medical bill, or sudden job loss without emergency savings often means dipping hands into savings or going into debt.

Solution: Focus on building an emergency fund as your first saving goal. Start with a target of £500, then work toward 3-6 months’ worth of expenses. Open a separate emergency fund account so it doesn’t get spent accidentally. Having this cushion can give peace of mind and prevent derailment of other savings when emergencies pop up.

10. Spending on the Wrong Things

Sometimes, people spend money on things that don’t align with what they genuinely value. Ever looked at your bank statement and wondered where your money really went?

People often spend out of habit rather than intentional choices. For example, spending on expensive meals when what truly brings happiness to you is travel.

Solution: Take some time to define what’s truly important to you. By aligning spending with values, it’s easier to cut out waste and put money towards things that bring long-term satisfaction.

Try writing down five areas that matter most to you and compare them with your spending to see if they align. If they don’t align, adjust spending to reflect what truly matters.

Final Thoughts

Building substantial savings requires more than willpower—it requires mindset shifts, specific goals, and practical strategies tailored to your financial habits.

By addressing these common obstacles head-on and implementing small changes, anyone can gradually move toward a more secure financial future. Saving isn’t just about what you earn; it’s about prioritizing, making mindful choices, and sticking with them over time.