Two weeks ago, I talked about how to approach saving for your pension. Now that you know that establishing a pension plan is a MUST, you can re-assess your basic financials and start saving.
To help you out, I’ll compiled a list of useful tips and tricks that I found on eZonomics.
1. Make it happen
One of the biggest enemies of saving is procrastination – we tend to avoid doing certain tasks for as long as possible. When it comes to saving, it’s important to start early! Cultivate your savings habit by transferring an amount every pay day and don’t put it off!
2. Earn interests on your interest
Don’t underestimate the power of compounding interest. A dividend reinvestment plan is also an attractive option to maximise your return.
3. Do not ignore inflation
Inflation can be helpful for borrowers but eats away at the spending power of savers. Ignoring inflation is dangerous for savers, especially for those planning for the long term.
4. Harness the power of friendship
Use a self-imposed arrangement with someone – why not make a bet with a friend that you’ll save a set amount each month for a year? Even informal agreements such as this channel peer pressure in a positive way and undercut the temptation to skip a month of saving.
5. Don’t get stuck on a number
If you’ve been saving €50 a month and you decide that it’s time to increase the amount, try not to get fixated on the €50 as a reference point. Do an objective evaluation of how much you can save – that way, increasing or even doubling your monthly savings might not seem so daunting.
6. Make a list
The flipside of saving is spending. So controlling one might help control the other. The so-called ‘shopping list’ effect illustrates how impulse buys can be reduced by the simple step of making a list of what you really need before hitting the shops and sticking to that list.
