You’ve heard it before. Everyone from your parents to that annoying guy from school who now has a six figure property portfolio has told you. “It’s easy” they say, a percentage aside each pay check and you will be well on your way to financial stability”.
Well it turns out that for some, saving money can be the equivalent of pouring water into a sieve. Whether you have the impulse control of a toddler hopped up on sugar or you simply can’t kick your habit for enjoying the finer things in life, saving isn’t always as easy as it seems.
Saving for the future is hard because it’s not clear what it’s for. Saving for a holiday, a new leather jacket or a car seems to be much easier. Why? Because the reward is clear.
You imagine floating on a lilo somewhere in the Greek islands. You picture yourself wearing that brown leather jacket and you can already feel the rush of acceleration as your new Audi whips through a series of bends on a deserted mountain road.
But putting money aside for your future just to be safe…? To put it in term deposit account? Compound interest just doesn’t get the juices flowing in the same way.
Mostly because it’s not clear exactly what it’s for. It’s the responsible thing to do, sure, but your brain finds it hard to imagine the pay off.
You know you should do it, but in a battle between present you and future you, present you tends to win.
Future you is the responsible (boring) type. Sure they want what’s best for you but they aren’t a great deal of fun. They are the voice of reason telling you that you should probably go home now and not go to the next club. Quite frankly, they are a bit of a buzz kill.
Present you on the other hand is fun. They have just bought a round for your new group of friends. They have ordered an Uber Black because they can’t be bothered walking to the bus stop. They are all about NOW. Whatever the consequences. They don’t care too much for spending money because quite frankly, it’s future you’s problem. There’s no denying it, present you is fun, but reckless.
And I suppose the Australian government gets that.
Our superannuation system is designed to put away 9.5% of our salary before we even see it because they understand that present you probably can’t be trusted.
It’s safe to say that if future you and the government were at party, they’d be drinking lemonade and discussing the importance of portfolio diversification.
As much as I hate to admit it, future you is right. Saving is important. And as hard as it is for present you to hear, that’s on top of the holiday you are saving for.
But it needed be boring, saving that cash means you can invest. You can make more money and eventually you can do all the crazy stuff you wanted to do anyway. If you get enough buffer, future you is known to turn a blind eye and let you run wild. So go on then, get saving!