What should you know?
This week we provide some tips to help you maximise your savings.
- Pay yourself first: Make sure your monthly investment contribution leaves your account the same day you receive your salary. If you don’t, you will often find an excuse to spend it.
- Automate: Make the monthly transfer to your investment account automatic so you never need to be involved. After a couple of months, it will become a normal part of your monthly outgoings and you won’t miss it.
- Save some of your pay rise: When you receive a salary increase, resist ‘lifestyle creep’ and instead, increase your monthly investment amount.
- Aim to save at least 20% of your income: With at least 15% going to your ‘future self’ (eg retirement fund).
- Maximise your tax & employment benefits: Make the most of incentivised savings (eg tax-free pension contributions/employer matching) – this is ‘free money’.
Why should you care?
Human beings are hardwired to prioritise gratification now, over gratification in the future. The farther into the future the alternative option is, the less important it seems.
This is why saving money can be so challenging for many. We are surrounded by the temptation to spend our hard-earned money on things that seem important today while neglecting to save for our future, which seems so far away.
We must acknowledge that our future will one day be our present and prepare accordingly. That means mastering the habit of investing regularly.
