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Training yourself to save for the future

How often do you really think about saving for the future? And how often do you actually do something about it? Why do we have such a hard time putting away even modest amounts?

Part of the obstacle may be psychological: It’s hard to keep something that’s still decades off top of mind. One of the biggest barriers to saving for the future is just the idea of getting started, because it seems too big and overwhelming—or just too far away.

It’s easy to understand why the money for the car you’re saving up to buy by year’s end can feel more tangible than for yourself in twenty years. But saving for the future is one of the cornerstones of basic financial security.

So what if you could retrain your brain when it comes to how you think about the future? Here are clever ways to start building up that nest egg better—and maybe even have a little fun in the process.

1. Rethink the “Future”

When you hear the term “future,” does it conjure up some decades-off money figure or do you actually think of it as an important milestone in life—like, say, your wedding day, your first home or having your first child?

Chances are, it’s likely to be the former. Adopt the term ‘lifetime planning,’ which turns it into something to think about now, rather than 30 years down the road. Consider viewing your ideal retirement as really your second career life stage or your world traveler life stage—as opposed to merely the amount of money you’ll need to get there.

2. Visualize Yourself in Your Dream Retirement Locale

Part of what contributes to the stress of saving is not knowing what your future cost of living will be. Will you keep an expensive holiday home in Nuwara Eliya? Or would you prefer to stay put in the home where you raised your family?

Rather than try to prepare yourself for every conceivable option, do some research to figure out how much it costs to live in a place that exemplifies where you could see yourself. “many choices are paralyzing. When it comes to where to live when you retire, narrow the choices down to three or four good ones. Then investigate just those few possibilities instead of every one. 

3. Give Yourself Future “Gifts”

Since the ultimate amount you think you’ll need to save may be intimidating, think about setting up smaller, more relatable goals for yourself along the way. Consider tying your savings to a holiday or birthday, which will give you annual guideposts to work toward—and associate saving for your golden years with something positive.

If you haven’t yet opened a savings account, the key is to simply get the ball rolling—even if it’s just a small amount—or get in the habit of adding more to your principal whenever you can. The earlier you start saving, regardless of the amount, the better you’ll make out because time and compounding are your friend. It’s a lot easier to save Rs.1000 to Rs.2000 a month when you’re 20, then waiting until you’re 50 … and having to save Rs. 100,000 a year.

4. Take the Path of Least Resistance

Overwhelmed by the thought of having to follow through on yet one more financial to-do each month? Set up defaults to help you save for retirement, so that you don’t have to make repeated conscious choices. If all of your paycheck goes to your checking account, there’s a much smaller chance any of it will ever make it into savings. So set up a Standing Order that will automatically transfer a part of your salary to a separate savings account. It’s not so much the amount—it’s about getting into the habit of saving.

5. Set Rules and Stick to Them

It can be easy to forget about upping your contributions as time goes by, unless something like getting a new job requires you to redo your paperwork. But in the same way that you’d schedule an annual health checkup, you should schedule an appointment with yourself to up your savings contribution. You can also consider tying your increases to a salary raise. If your pay goes up by 5%, then boost your contributions by 5%. Or if you don’t think you can devote the entire increase, then choose a percentage of that raise to allocate to your savings account. This way, you’re consistently saving more, while still enjoying the fruits of your hard work.

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