4 Reasons Why We Need To Save

August 10, 2020

Saving and spending money are arch enemies. They cannot co-exist. For every cent spent, you can’t save, and vice versa.

If we work so hard for the money but don’t spend, why work so hard? If we spend too much and don’t earn enough, we’ll get ourselves into financial trouble and it may even affect our families.

So should we save or should we spend? The key lies in the balancing – how much to spend, how much to save, when to save and when to spend. For every cent we save, there must be a reason, if we can’t find one, then it’s better to spend it, because we can always find a reason to spend.

There can be many reasons to save, we will discuss 4 major reasons why we need to save.

Save For Emergency

In an article published in The Straits Time dated 21 Jun 2020, OCBC conducted a survey on 1,000 working adults aged between 21 and 65 who earned at least $2,000 a month. It was found that, on average, two in every three of them did not put aside enough to last beyond six months.

As the saying goes: ‘As we learn how to make money, the next thing we learn best is to spend money. Usually better.’

“As we learn how to make money, the next thing we learn best is to spend money. Usually better.”

The problem arises when we spend more than we earn.

What will happen if we lose our income longer than the emergency fund can last?

First, when we fall into debt, we would be stressed. A lot of what if’s would pop up in the head. Next, we would get frustrated easily and would hurt our relationships with our loved ones. Subsequently, we would lose our judgement call and make mistakes that we would not under normal circumstances. If things still don’t get better, the vicious cycle will continue and may potentially end up a bankrupt.

Many people know the importance of emergency funding, but seldom people diligently set aside the money. Make it a point to have the safety net. We’ll never know when we need it, that’s why it’s called emergency.

Save To Satisfy The Desire Of Material Gratification

All work and no play makes Jack a dull boy. Working and living in Singapore is very stressful. We need to de-stress ourselves via entertainments, hobbies, holidays and indulging in our favourite past times. We need all these so that we can continue to work to earn more income.

To satisfy these desires of material gratification, we must set up a saving system to accumulate enough money to spend. The challenge lies in that many do not target and budget for it.

To them it’s too expensive and too far to dream about. Hence, instead of saving for these material gratification, they spend too freely and too much on nitty gritty things that don’t satisfy their desires and continue to feel stressed. For example, a must to hold a cup of Starbucks coffee while walking into office in town when we can’t taste the difference between a cafe latte & a mocha. Worse still, the cup of coffee is half drunk and thrown away because it’s cold and another one is bought after lunch. The spending on these nitty gritty can easily add up to more than the desired material gratification spending.

Plan your spending and make each of them a memorable event.

Save for Retirement

The reason to save for retirement is a no brainer. The moment we retire, we stop earning active income, but we continue to spend. And the spending doesn’t stop when we die but only when all our after-life matters are paid. Money must come from somewhere. Saving sufficiently for retirement will ensure that our desired lifestyles are not compromised during retirement.

There are many retirement expenses that are necessary but neglected by many when they plan for retirement. Medical insurance for instance, as we grow older the more we will need medical insurance and the premium will grow higher and higher every year. Also, many also miss out the fact that when we stop earning income, we have more time to spend money, and the expenses will increase without us realising it.

If we don’t save enough for retirement, we will end up having to depend on family, which will further stress them financially or more drastically we will have to trade our dignity for charity.

Save For Legacy

Leaving a legacy does not guarantee financial success for our children, but it definitely helps to take some stress off their shoulders. Leaving a legacy is not for them to feel rich and spend freely, but to give our children an advantage in handling their financials. An inheritance will provide the opportunity to invest in themselves for better financial prospects and thus set the course right for the next generation.

To save successfully requires discipline and a system. There are many systems and vehicles in the market that we can use to save. Seldom do we have people failing to save because of system but rather lacks the discipline to do so. And the discipline to save is largely dependent on the reasons why we want to save. If the reason to save is strong enough, all spending will give way to it. As a wise man once said, “when there is love, nothing is too much trouble and there is always time”.

That sounds like discipline.

Happiness is… when your saving triumphs spending

PS – What are some of the reasons you have to propel you to save successfully. Share with us in the comment box below.
PPS – If you have the reasons but not a system to save. Contact us here.
PPPS – Please share this article to friends whom you think should start saving before it’s too late.
PPPPS – Please share this article if you agree that Saving should triumph Spending.

Disclaimer: This article may contains personal views, thoughts, and opinions, which may not necessarily reflect the same for Professional Investment Advisory Services Pte Ltd. The information provided herein is intended for general circulation and are not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use will be contrary to local law or regulation. This presentation may not be copied, either in whole or in part, or distributed to any other person without our specific prior consent. Please seek advice from a Financial Adviser Representative or consult a professional regarding the suitability of any financial product, taking into account your specific financial objectives, financial situation or particular needs, before making a commitment to purchase the financial product. In the event that you choose not to seek advice from a Financial Adviser Representative or a professional, you should consider whether the product in question is suitable for you. This newsletter may contain product advertisements which have not been reviewed by the Monetary Authority of Singapore.
Photo credit:
Kenny Tey
Pathwise Advisory Group is a group of financial adviser representatives representing Professional Investment Advisory Services Pte Ltd.

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