The main challenge with regular saving is that it is up against instant gratification; humans just aren’t hardwired for long-term savings.
We have numerous internal reward systems that go crazy when we have the pleasure of buying ourselves a treat. Marketers have been taking advantage of the pleasure responses for years. It means we consume more, and more frequently.
So how can you make saving pain-free?
We have pooled together the knowledge from the team at United Advisers to give you our 5 top tips for becoming a regular saver.
Set yourself a goal
David Cooper is the Sales Director here at United Advisers and he recommends always setting a goal:
“We have always found, when working with clients, that having a clear goal significantly increases the amount saved each month”
He continues to add:
“We work with clients to understand what would be an achievable sum to put aside each month. One of the biggest challenges that clients face is realistic goal setting. They often want to commit to a large sum but this can sometimes be unachievable. It is better to set an achievable goal as we have the reward factor of achieving this each month. This way there is money aside for enjoying some of the finer things in life too. All of this leads to more motivated saving”
Goal setting, be it for saving, fitness or dieting, is the most important step in success. You may want to chart your progress when it comes to saving. Watching the balance rack up every month is always good motivation. Think about what that regular savings sum will provide; this is normally more exciting than the investment statement.
Do you need it or do you want it?
Nick Tipper is our Wealth Manager in South America and he recommends working out what your motivation for the purchase is:
“Ask yourself if it is a must have or a nice to have? Can you hold off purchasing for a few months and wait for the price to fall? Or do you have to have that new Rolex right now?”
Nick adds:
“The key to regular savings is making small changes that won’t impact your lifestyle or your quality of life. Many people follow either extreme; not saving anything at all or sacrificing all treats and luxuries to save a lot. We recommend balance. In delaying certain purchases or in purchasing an alternative we find that clients are able to become regular savers without noticing any significant changes in their lifestyle”
Save what you can afford to save
Darren Slinger, our Wealth Manager in the Netherlands says that:
“Saving money is an integral part of successful financial planning, but it is imperative to make sure that the amount that you put away is affordable to you. Making sure you do your sums before starting out will prevent problems in the future”
What would bring the greatest savings for the least sacrifice?
We all have regular purchases that are our treats. For some this may be their morning coffee, for others it may be a gym subscription. Regular savings shouldn’t be at the sacrifice of all life’s pleasures but it makes sense to review your outgoings on a regular basis to rationalise them.
Oliver Maher, our Marine Wealth Manager, recommends reviewing your spending every six months and prioritising. The treats to keep are the ones that are relatively low cost but give you the most pleasure. The ones to cull are those that you aren’t overly attached to but are costing you a lot. These can be simple things such as an expensive mobile phone contract you don’t need or running multiple Spotify accounts at home rather than switching to a family account. As we showed in ‘Financial Recommendations before you’re 30’, making small changes, like sacrificing your daily coffee, can lead to savings of $65,250 over 12 years.
Spend your savings
Not the advice you were expecting to hear?
Director, Paul Evans, explains why it is so important to enjoy some of the fruits of your labour:
“Most of us find it tough to continually strive toward a goal without any return. The same can be said for savings. Enjoying what you have saved, in moderation, is as important as setting up the environment to become a regular saver.
It is important to enjoy a percentage of your savings; this might be in the form of a family holiday or a new car. What a suitable spend is really depends on your needs. Just remember to always balance living today and planning for the future.”
Get your plan together
To become a great regular saver you need to have a plan. In the same way you would build a training plan, or diet plan, to achieve a personal goal.
This is about how you will save, what you want to achieve, and the returns you anticipate receiving.
Getting the right advice matters.
If you would like to talk with us about building a financial plan, please get in touch with our nearest office; you can find our locations here.
