More often than not, people are not able to retire due to the many commitments in life. In our consumerist society, we need things to prove that we are successful. We need so much money to maintain our current lifestyles that retirement is not an alternative at all. Secondly, most of us are not able to retire due to a lack of savings and losing our jobs means a complete loss of income. This is why it is so important to spend below our means, save and to accumulate assets that can generate us passive income upon retirement. It is so important, yet so many of us fail to do so.
When this happen, we blame the economy, our government, the banks, and everyone around us, but we fail to see how we are sabotaging ourselves financially. We are the reason why we fail to accumulate wealth and attain financial freedom. We fail to plan for our future, fail to save, and over-indulge in life.
Avoid lifestyle inflation
It is so true that the more we earn, the more we spend. I remember years ago during my first office job as an intern in an accounting firm. A salary of $600 was more than enough for my daily needs, for me to pay for food, transportation, to help out at home, for weekends entertainment, and still had room for shopping as well. There was still a tiny bits of money left at the end of the month, right before pay day. It just was barely enough to save, but it was enough to get by. However throughout the years as I earn more, not only was I not able to save, I find myself running out of money the week before payday and needed to use credit cards to tide me over. There was also always an endless list of things to buy. I needed a new pair of heels, more dresses, the latest gadgets, a new wallet, a new watch, or a new bag. There’s a constant nagging feeling in my stomach that I need to save, but I always tell myself I’ll save the very next month, or when I get my bonus, or when I get the next increment, or after I bought what I wanted. I started work at 20. At 28, not only was I not saving any money, I was in debt. I was better off earning an Intern’s salary than a salary of an Finance Analyst in a private bank. My lifestyle had inflated so much over the years that I didn’t realized it. I hardly stepped foot in hawker centres or coffee shops and always had my meals in restaurants. I bought at least 10 dresses and a pair of heels in a month. I needed to do my nails, do treatment/cut/colour my hair, or do eyelash extensions every single month. In short, I had no control over my money.
Budget and keep track of expenses
It is funny how I have been tracking expenses and doing budgeting for all the companies I worked for, and yet I had never done it for myself until this year. I was so shocked when I looked through old bank statements and credit card bills and realized that I spent over $1,000 a month on food and drinks, and a few hundred dollars on cabs. A budget is useful in so many ways. It sounds like a chore at first, but once it became a habit, all I need is just half an hour a week to update my expenses and see how much I have left for the month, on what I can spend.
Cut expenses and SAVE MONEY
I used to find it so difficult to save. Now with a budget in place, I usually do a forecast on how much I need for the next month and determine how much I am able to save upon pay day. The first thing I do when I get my salary is to immediate transfer a certain amount (usually 20% of my salary) to my saving account. Trust me, it’s a great feeling watching my savings grow.
I initially avoided using my credit cards again for fear of repeating my old foot steps, but I realized I’m missing out on discounts and the chance to accumulate points. Now whenever I use my card, I’ll make payment the very next day or within the week of making a purchase.
Where I’m standing right now
10 months has gone by and not only are there no new debts, but my saving has grown substantially as well. Just by taking these small steps, I have improve my financial life quite drastically. It is drastic because of the good money habits I have picked up, and that I have learnt to invest as well. Looking back, it wasn’t that difficult at all. I only wish I had started earlier.
Now, a comfortable retirement is possible for me because I’m planning for it and am willing to sacrifice material things for financial security and freedom. Don’t wait till you are in your 50s to start saving, planning and investing for retirement. It’ll be too late then.