The list of reasons for not saving are endless. Most of us realise we need to save but face the dilemma of the here and now: current living costs and monthly pressures on the family budget. But it should be no excuse.
People blame small salaries, tax, cost of living expenses, debt and even their unreasonably priced car payments for their lack of saving. We are all doing a juggling act – trying to keep the balls of income, goals and savings in the air. However, the one that drops most frequently is the savings ball. You may even be wondering if it is even worth saving at all – especially if you are nearing retirement and watching the boat sail without you.
Estelle Scholtz-Mare, Head of Financial Wellness for Momentum, says that, “You are never too young or too old to save. A young person has the advantage over their older peers because they have time on their side; an older person has the advantage of a bigger income. Either way, everyone needs to keep the savings ball in the air.”
A 25 year old who saves R10 000 a year throughout their career will amass nearly R2,6 million by the time that they are 65, (assuming eight per cent annual growth). If they wait until the age of 35 to start saving they will only accumulate R1,13 million. If you want to take the risk of waiting until you are 35 to start saving then you would have to save R21 000 per month to catch up.
When you play around with the figures it can be a real wake up call to discover what you need to reach your savings goals. While the reality of your savings situation may not be inspiring, hiding your head in the sand is not going to materialise a benevolent genie. If you are young, save like Scrooge until you are 35 then you will be in a much better position when you need the money most. Around the age of 35 the big bills start rolling in with children and all their associated costs. If you are a stay-at-home mom you should not abandon your savings, even if it means getting a part time job or asking your partner to kick in some cash. You lose way too much ground if you opt out of the savings game for five or 10 years. If you have procrastinated, no matter how far behind you are you need to get moving. If you have 20 years left to 65, plan to work another five years, scale down your expenses and see a financial advisor to make sure that you optimise every savings cent.
When it comes to juggling finances, our savings draw the short straw – it’s time to reprioritise. To get on the track for financial wellness you need to brace yourself and find out how much you will need to save. Go on a debt cutting mission and scrutinise every cent spent.
The best time to save is right now, no matter what your excuses or ‘yes, but’s’. Saving is sometimes seen as some kind of moral reference point but it is actually the ultimate indulgence. A sensible savings plan now will buy you security, financial wellness, insurance against financial calamity, leisure time and choices – all things that most of us do not have enough of.
Article adapted from Estelle Scholtz-Mare, Head of Financial Wellness for Momentum, published in Insurance Times and Investments