People in different countries have different attitudes towards saving; and yet across the globe, we all come up with similar excuses for postponing the adoption of a money-saving habit – a pity if we consider that putting money aside is the first step towards building your wealth.
“I don’t save because my expenses are too high.” The fact that household expenses are high is very true (26% of Luxembourg respondents to the ING International Survey (IIS on Savings this year said their savings had declined compared to the last year). Yet, it is still possible to economise; all you need is a broad overview of both income and expenses of your household. Seeing your budget in black and white will help you get rid of false assumptions and identify expenses that are no longer necessary or can be modified (e.g. carpooling). Remember: to start saving, you do not need a lot of excess income! The important thing is to build a habit, even if you start with €50 a month.
“I’ll start later.” Procrastination is human, but it is especially counter-productive when it comes to saving money. Of the respondents to the IIS on Savings who stated their savings had increased between 2015 and 2016, 50% claimed the reason was a “deliberate decision”! However, besides making a habit of putting money aside, there is another crucial element to saving: the compound interest. Often underestimated or even dismissed, compound interest is the interest you earn on the interests that your savings have already produced. This can make a big difference in the long term even if your monthly saving capacity is limited.
“It’s too late to start saving.” It is never too late! Granted, the earlier you start, the larger your nest egg will be in the end (all things remaining equal), but it is never too late to start putting money aside for an emergency fund(of respondents whose savings decreased in 2016 43% said it was due to unexpected expenses), for a dream trip, for a special occasion, etc.
“My salary isn’t high enough.” When it comes to savings, the absolute numbers are not relevant. The important thing is the relationship between your income (e.g. your salary) and your expenses. Whatever your current salary is, your expenses should never be higher. So reviewing your spending habits might free up some spare change to start hoarding those bucks!
“I can’t save because I’m paying off my mortgage.” Mortgage instalments often claim a significant portion of a household’s income (17% of Luxembourg respondents to the IIS on Mortgages last spring stated they found it difficult to pay their mortgage at the end of each month). All the more reason to put money aside to repay your mortgage more quickly or to invest in a cache for when you have repaid your mortgage. And do not forget that once you are done repaying your mortgage you can allot some of your income to start saving instead (e.g. if you used to earmark €1,500 a month for your mortgage repayment, start putting aside €1,000 each month to build your wealth).
There is a myriad of excuses for dragging your feet. Make sure your reasons for not saving are grounded in reality instead of blind assumptions. Believe me: tomorrow you will wish that you had started saving today.