It’s a brand new year. And that means it’s time for New Year resolutions (again). Besides wishing for a healthier lifestyle, reading more books and a more organised bedroom, many of us would definitely wish to save more money this year.
Despite our promises to save money, many of us just seem to fail terribly at it year-after-year. Here are 8 lame reasons that many of us mistake for legit excuses for not saving.
1. I Am Not Earning Enough To Save
This excuse is overused by many of us, especially the undergraduates who are working part-time. But unless you are in the lower income bracket who needs to support housing loans and family, this excuse is invalid. Chances are, you will never feel like you are earning enough, so when are you ever going to start saving?
Moreover, if you can’t even save $50 when you make $500, what makes you think that you can save $1,000 when you earn $3,000? So, no matter how little the amount, set aside a small portion of your income to cultivate the habit of saving.
2. I Am Always Filled With Events
Most of us would go through this – we have our friends’ weddings, birthdays, endless drinking sessions and other entertainment expenses that can take a serious bite out of our budget. Every month seems to be filled with events that distract you from your saving plan.
While events such as weddings and birthdays are inevitable (unless you live in a cave), entertainment expenses can be easily controlled. For instance, it’s easy to bust your alcohol budget without even realising it. To avoid this, set a budget and make sure to keep track of your booze and other entertainment expenses at the start of every month. To play safe, you can leave your credit cards at home and just pay with cash (a reasonable amount) to control your spending.
3. I Am Happy With My Current Lifestyle
Semi-annual vacations, annual phone upgrades and monthly trips to Sephora to buy eyeshadow palettes and lipsticks of the same colours (stop telling yourself they are different shades!). While it is good that you’re happy with your current lifestyle, it might be a good idea to switch things up if you are not saving enough as you should.
Sure, it feels good to “live in the moment”, but try eating those lipsticks of pricey watches when you are short on cash before your next paycheck.
4. Why Save When Interest Rate Is So Low?
It can be discouraging to see the ridiculous savings interest rate of 0.05% per annum (p.a.). However, bear this in mind: you don’t grow wealth through interest, you invest to increase wealth. Savings are meant for emergency and investment fund.
Besides, many banks in Singapore offer saving programmes that give you additional interest rates when you utilise one or more features from their bundle of financial services.
For instance, you can earn up to 3% interest (p.a.) when you pay your bills and credit your salary with a Maybank Saveup account. Meanwhile, the OCBC 360 savings programme lets you earn up to 3.25% interest (p.a.) when you credit your salary or pay bills online with your account. So, interest rates don’t have to be as miserable as you think, if you know how to take full advantage of such services.
5. I Don’t Save. I Invest. Savings Won’t Get Me Any Returns
Since you are into investing, you should know that cash is king. It is never fun to miss an appealing investment opportunity when you are short of cash.
6. I Have Other Liquid Assets To Sell When The Need Arises
When you are able to buy low sell high, good for you. However, sometimes you might have to force sell the asset at a loss due to an unfavourable market condition. That would be a waste since you did not allow the asset to grow to its potential.
7. I Have To Pay For Child’s Expenses
It can be hard for you to save when you have children. However, think again. Shouldn’t you, all the more, save money to sustain your kids’ expenses in case you can’t work for a period?
And don’t even think of relying on them after you retire. Here’s why.
8. I Don’t Have To Save, I Have A Steady Flow Of Income
Most of us are guilty of this: splurging on something while thinking about our future income. Be it upgrading your phone in June while thinking about your bonus in December or going on a shopping spree months before the GST rebates.
This is called counting your eggs before they hatch. Pray hard that people don’t cook your eggs after they hatch. It can be problematic when you are tired of your job as you are forced to work for that psychotic manager because you are short of money.
The 50/30/20 Rule
Often, our lack of attention is the main problem. Back in school, we budgeted our $50 weekly allowance carefully. Over the years, with higher cash flows, we get distracted and gave less attention to budgeting and getting rid of unnecessary expenses. We have overlooked how the habit of saving will provide us with more flexibility and options, be it taking a long break between jobs or any unforeseen circumstances.
Experts recommend that you divide your monthly budget according to the 50/30/20 rule – 50% for your needs (think housing and food), 30% for your wants (like night-outs and party), and 20% for financial priorities, which include debt payments, retirement contributions, and of course savings.
So no more excuses for not saving this year! You are welcome.