Home finance Saving for the future

Saving for the future

0

It’s probably a fairly common fact that 99% of the world’s population would like to be financially free, but only 1% ever achieve it.
A well-known human behavioural specialist, himself a multi-millionaire, relays the story of a client of his who earned about $6 million (US Dollars) a year, but at the end of that year had to borrow about $300,000 to pay debts and taxes. His secretary, by comparison, earned a meagre $2,000 a month (so $24,000 a year), but managed to save $400 of it, or 20%. She was on her way to financial freedom faster than he was, though he out-earned her 250 to 1. This behavioural specialist concluded his story by admonishing that it’s not how much you save, but the habit of saving that is important.

The truth is, you have to value saving in order for it to become a priority. But we have all seen the sad tales of woe, of elderly people begging on the side of the road because they did not provide more effectively for their financial future.

Anybody who has undertaken any endeavour will tell you that it always took longer and cost more money than they expected. The same is true of our financial future: it will cost you more than you can imagine now. And for this reason, it is important to save. The conventional 10% that many companies make you save when they remove this cash form your salary cheque is also not enough. Can you imagine having to pay R100 for a loaf of bread? Savings have to increase annually, to not only keep pace with inflation and the rising cost of living, but to beat it.

Scenario planning is a good way to motivate yourself, even if you spend just a few minutes doing it mentally, like a meditation session. Cast your mind forward 50 years into the future, and imagine a typical day. You have to go out and do a bit of grocery shopping, and get some stuff for dinner. How much do you think it would cost to do that? Today you are probably looking at nothing under R100, but even 10 years from now that might be R500 or more. It’s a little scary, but it will get you to think about your financial future.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

ten − 2 =