Why is it hard to save money?

The decision to save or not to save is always a personal choice. Everyone's financial situation is different, and therefore, not everyone can allocate the same percentage of their income towards savings. However, everyone should be saving money (even a small amount) regularly.

Here are some of the reasons clients often tell us ‘why they cannot or think they do not need to save.'

There is always something in the market that needs to be bought.

"I was planning to save this month, but the new iPhone just launched," says Rahul, a 26-year-old software engineer. "And I need to upgrade because my current phone is already two years old and not running the latest apps smoothly."

You can always enjoy a better television or a newer car, but splurging on the latest models can be expensive and often unnecessary. We usually see young professionals frequently upgrading their cell phones, and that too on EMIs. Everyone wants the latest iPhone!

However, is it in your best financial interest?

Let's live today and leave the worries for tomorrow.

"I'm only 25, I should enjoy life now. I'll start saving when I'm older and earning more," says Varun, who spends his entire salary every month on outings, travel, and the latest gadgets.

This is probably the most common reason why people choose not to save money, and it is also probably the most significant financial mistake that anyone could make. Just because you have other financial priorities, such as travelling or buying new gadgets, doesn't mean that you can't save money for your future at the same time. The longer you wait to start saving, the more you will need to save.

I am young right now. I can start later.

Procrastination can be a huge financial mistake; it can be very costly.

For example, if you save ₹5,000 per month for 20 years at an interest rate of 15% per annum, you will accumulate approximately ₹75 lakhs by the end of the 20th year.

If you choose to start saving later and save for only 15 years instead, you will only accumulate approximately ₹33 lakhs. This is the power of compound interest, which early savers and investors enjoy.

I will leave everything anyway when I die, so why bother with saving?

"When I die, I can't take my money with me, so why not enjoy it all now?" asks Ravi, a 45-year-old businessman who spends lavishly on luxury items and vacations.

This is true, but no one can predict when he or she will die. If you don't have sufficient savings to meet your financial needs in old age, you will have to depend on others (Would you want to be dependent on your children?). You may or may not be able to lead a life of your choice.

I am too young to start thinking about retirement.

If you have more years to grow your money, the less the amount you need to save.

For example, someone who is 45 years old and wants to accumulate ₹6 crores for retirement (at age 60) needs to save ₹90,000 per month. The total investment over the 15-year horizon will be ₹1.71 Crores. However, a 25-year-old must save only ₹4,000 per month to accumulate the same amount by the time they retire (at 60 years of age).

Get into the habit of saving as early as you can.