The Footnotes

FINANCIAL GODDESS

Why there is no excuse for not saving

Why these excuses you give just do not cut it in 2015.

1. I cannot afford it right now.

We all hate that ‘time of the month’. You know, when your phone bill is due, that parking fine is about to expire and then your best friend decides to book a table at that new tapas bar on Friday night because ‘We never try anything new’. Between a share plate and your round buying a bottle of vino there is really not much left for savings.

If only every time you started to feel spontaneous you could rely on your bank account to tell you to, “calm the fuck down” – then we wouldn’t be having this chat. But thanks to the wonders of pay pass, you can swipe on the go, and often today the biggest wake up regret on a Saturday morning is logging into mobile banking to scroll through your transaction history.

Think about it, if you can find $50 for dinner and drinks, you can find $200 a month to put into savings.

Make it happen, month after month.

2. I’m young. I have so much time.

This is one of the more seductive excuses, erasing the guilt and encouraging indulgence. And we hear you – you work hard for your money . But saving for your future and enjoying the present should not be treated as an ‘and/or’ decision for you to make. The example below will fundamentally change your perception of saving early in life.

Charlotte and Henry both put just over $50,000 in their retirement accounts over the years, but Charlotte began saving ($2,000 per year) at age 24, while Henry began saving (about $3,500 per year) 20 years later at age 44. Even though they both put in the same total amount, Charlotte will have over twice as much money at retirement as Henry will when they reach age sixty-seven (assumes a 6% annual rate of return). That’s because her money had more time to grow, so it was able to make more off of itself than Henry’s.

Simply, to make money, you need to understand how to make money work for you .

3. I will be living in a home with a dual income one day, we will buy a house together.

This one swings both way. Dual income is great, but if one of party looses a job, decides to come home and raise a family or changes careers – that means that the partner now bringing in the sole income is supporting two people. Think, their earnings will be stretched proportionately.

Thinking that you will be able to rely on your partner’s future income to help you negate the property market or your lifestyle is simply an outrageous assumption.

4. The housing market is so steep, it will be years before it improves – It would be unrealistic to start saving for an asset now.

No one can predict the market. No one. So while it’s true that we are currently in a record high buyers market, the choice to deal with the reality later is mislead choice. You are only able to save a small amount each month, and everyone has been telling you to save for a deposit.. then no, they tell you “don’t buy in Sydney”… then back to the housing ladder game – there is no shortage on advice or opinion when it comes to the first home buyers market.

While there will always be ‘ups and downs’ in the property market, Home ownership lets you people escape rents that are rising far ahead of mortgage costs and too, it gives you a stake in an asset that, despite the ups and downs of the financial crisis, still seems likely to rise higher over the long-term.

 5. My parents will be able to help me.

Allowing the subconscious reassurance that if things get bad, your Mum and Dad will chip in is a case of counting your chickens before they hatch. Life happens, medical bills happen, financial crisis happen, hidden debts and taxes happen – and in this way, no money is your money until it is in your name.

 

Why there is no excuse for not saving
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