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Making savings a ‘forced’ habit

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I read from a comment in Facebook about an investor whose mother told him that savings is a must. Buy what you need and not what you want. Before you buy, step back and think whether you really need it. One thing I have never done is to follow the technology. I do love latest LED TV but if my current LCD TV works okay, I will not be buying anything new anytime soon. In terms of technological products, can you do without it? Do you even need to be the first batch of buyers? Typically first group of buyers tend to pay higher though they get to brag about it. I know, people may smile when they see my ‘old’ TV but it is ok. I can still watch as much football as they could.

However, I do not think I am able to think objectively all the time. Thus, I do one extra thing which limited my spending. I bought a few savings cum insurance plans. Those where you either save on monthly or half yearly or yearly and after a period of say 20 years, you get some returns plus during that period, you get some form of insurance coverage. If you look at the return, it baffles you why people still buy. However, I am buying and of course I put the beneficiary as my wife. Every month, my credit card will be debited and thus I ‘forced’ myself to save that amount automatically. It is not a habit but the effect is the same.

Thus if you cannot make it a habit, be savvy about it. Force yourself to do it automatically. It does not need to be a savings plan. Can even be automatic debit for a low risk unit trust. After 20 years, you will be glad you did it even if the return may have been low. For this kind of investment, don’t evaluate it like a property investment. Think of it as money you lost today and found many years later. I trust that you would still be delighted if you suddenly found a rm100 note under your car seat and then only you remembered why it was there many years ago. Cheers.

written on 9 Jan 2014

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