Investment and Financial Services Association released a report last year which said that ‘Australians are world’s worst savers‘ - not a record we should be proud of. It has been pointed out that the low deposit rates are partly to blame for this. I agree to this but I don’t think we can escape by pointing the finger at the ‘low interest rates’. I think the core problem is our spending habits - most of us spend more than we earn. The simple fix to the savings problem is to spend less than we earn. Common sense isnt’ it? Then why is it that most of us fail to see this? It all starts with our thinking. People who are financially comfortable think differently to people who are not. Here are some of the things you can do to change your thinking towards savings….


Spend Less Than You Earn: I understand that due to credit cards and easy loans, these days it is very easy to spend more than we earn.

But you need to teach yourselves not to do that.

Cut down on all the unwanted expenses. Create a budget and monitor your inflows and outflows. Spending for anything that will go up in value is good spending. Its the bad spending that you need to watch out - like shopping more than you can afford, or taking loans to buy a car when you can’t afford the repayments etc. If you can’t afford it then don’t buy it…

Think Long Term: It is not enough if you have a good lifestyle today, you need to have a good lifestyle in the future as well. A lot of people have goals when it comes to their personal lives or career. But very few have financial goals. Without well defined financial goals you are lost. And again goals without any action is useless. You might have a goal to live in a million dollar water front property. But this goal will only be a dream until you start taking action. Initially start off with small goals like saving for a holiday or saving for a car etc…Once you start reaching these goals you start gaining more confidence and in the process you will set more goals and will work towards achieving them.

Value Of Money: Every dollar has a value - every dollar is hard earned money. Treat money with respect. Once you set goals and start working towards them you start understanding the value of money. Before you spend on unwanted items think how hard you had to work for that money.

You Don’t Have To Be Misers: People who do well financially are not misers. They spend on things they have to, they eat well, they go on holidays etc. To save you don’t have to become misers. Don’t get confused between the two. I am not a miser and don’t advocate anyone to be one. Always remember - ‘being careful with money is a good thing and not a bad thing‘.

If you are parents then you should start educating your children early on. Children learn from what they see - so lead financially educated lives and your children will learn from that. Talk to your children about the value of money - Don’t buy them everything they want. Children are experts in manipulation and making you feel guilty. Don’t succumb to this - By buying them everything they want you are doing them a disservice (by making them not understand the value of money).

I am a strong advocate of early education in this area…Teach them young and save them from problems later on….Do you share my thoughts? How do you teach your kids the ‘value of money’? As an adult if you were a bad a saver and are now a good saver, how did you change?

Topics: Financial Planning |

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