Excerpts from In/Outcome – A MPH best selling book on managing your income, achieving great financial outcome.
We all know we need to save. But sometimes getting there seems daunting. Perhaps it is because we are all piled up with expenses as we go along in life. However, we all know that if we neglect what is truly important in life, some things might come back to bite us.
When it comes to savings, it does not matter how small the sum: the important thing is to
start. Every journey begin with the first step. Start with something as small as 5% of your monthly income.
Why should one save regularly? Here are 3 BIG reasons.
1) You slowly build a financial fortress to withstand financial shocks
Just saving RM200 a month at age 25 and increasing that by 5% per annum in a 9% growing fund will yield more than RM500,000 when you are 60. This is amazing because your capital was only RM115,004. This, my friends, is why compounding is so powerful. Giving your savings time and compound growth is an excellent method to build a financial fortress for yourself. This way, if there any financial shocks eg a loss of a job somewhere in the middle of the time, you are able to withstand it because you have built a large enough amount to be able to take care of yourself.
2) You immediately feel better because it is the right thing to do
Deep down inside we know that there are things that we MUST do to avoid pitfalls in life. Once you have set a programme of saving regularly, a load of worry leaves you. This is because we are humans. If we must keep making multiple decisions every day, we will have mental fatigue. With work, you are already facing so many new decisions all the time. Steve Jobs and Mark Zuckerberg wear almost the same clothes daily. This prevents mental fatigue and enables them to think deeply about other issues. So, once you have implemented your regular savings programme, you can rest easy that your money will start accumulating and growing.
3) You set yourself up for success when you automate your monthly savings
In the book “the Automatic Millionaire” by David Bach, he details a simple, yet most effective way people get to being a millionaire. This is by ensuring that savings is automatic. You do not expand any energy on doing the work monthly. You simply allow technology (and a good Financial Consultant) help you do the job. How to get to a million? From the example on reason no 1, saving RM200 per month (the savings increase 5% per year) for 25 years at 9% will give you more than RM500,000. If you can dedicate RM400 to your savings, you are done!
Come and talk to us here at FinAIMS. We are not pushy, and we really want people to save for their future. May you be sitting in the shade tomorrow because you planted a tree today. (Warren
Buffett’s quote adapted)