If you find it hard to save money, you’re not alone.
A JobsCentral survey covering over 3,000 salaried workers found that about 60% of Singaporeans save less than one-fifth of their monthly wages – the minimum required to adequately meet retirement and future financial needs, according to financial experts. Is it something in our blood?
We say no. Here’s how to change this.
Would you rather pay full price for (already overpriced) coffee now, or wait a week for a half-price discount at a new outlet?
Impulsive buying is really just our cognitive bias making future rewards seem less enjoyable – even if the future reward is much more valuable.
Trade this immediate gratification of spending money now for the satisfaction of saving up money for the future.
Try this strategy: Every time you want to spend on impulse (coffee, shoes, snacks, etc), take one-fifth of the amount you would have spent and put it aside. That’s your impulse fund.
Tell yourself you will let yourself have your indulgence only when your impulse fund allows it. If you follow the one-fifth rule, you’ll be able to have your expensive cuppa after denying yourself only four times.
NEXT: Discounts don’t save you money →
If you buy something originally retailing at $1000 at a discounted price of $500, you save $500, right? Wrong.
You spent less on your purchase; but your brain is apt to treat the discount as money to be spent.
Think about the last time you received an unexpected sum of money, such as a tax refund, birthday money, or even your bonus salary. Chances are, seeing this money as money you didn’t actually have, you spent it on something you didn’t really need.
Instead, try physically moving any discounts that you get into your savings account. Only then can you be sure that the $500 you got from your discounted purchase is truly saved up.
NEXT: Know where your happiness stems from
As you continue saving up more money, you may find a curious thing happening. Knowing that now you can buy yourself that new jacket anytime you want, you feel just as happy without it.
Why is that? Because it’s not the actual buying of things that make us happy. Rather, happiness stems from the freedom to buy things.
NEXT: Delay your gratification
By Alevin Chan, SingSaver, November 2016
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