Disciplined saving and investment arekey to a cushy retirement. But savers can easily be wooed by the short-term gratification of spending.Experts have weighed in how you can master the psychology of temptation and keep your finances intact, as you set goals and stick to your financial plan.“Delaying the decision to commit to a financial plan is the major obstacle to making your money work for you," said RabihKhalek, VP-Head of Accident and Health & Unit-Linked - Fund Management at MetLife EMEA. “This is the opportunity to improve your finances. It is not easy, one might argue, but it is also not impossible."
Planning well and committing to achieving a goal – however small it may be at the start – is essential to gradually growing your cash cushion. By building an intimate connection between your financial goals and the things that matter to you most (for example, saving enough and investing wisely so as to have a financially secure future that will allow you to enjoy your retirement years with your family), you will be able to create a savings plan that works for you.
Regular contributions into a saving and protection life insurance policy, for example, are not only an additional means of financial protection, but a good way of diversifying investments as well. Many people may have the misconception that life insurance is only good for providing your family cash when you pass away, but this product can actually do wonders in your asset diversification strategy.
Certain life insurance products offer investment options with different methods of growing your cash stash. In addition, it builds cash value over time, allowing you the option to withdraw part of your investment during or at the end of your plan, helping you to eventually streamline your cash flow.
“This provides the full flexibility that will help an individual start easily and build the desired schemes that are more suitable and sustainable based on his or her financial aspirations. This comes along with the protection required to maintain the standard of living a person aspires for while accumulating wealth," adds Rabih.
Committing to a financial plan
Not setting a clear financial plan is like getting on a plane without knowing your destination. The best way around it is to attach an emotional goal, such as children's education or retirement independence.Once you do that, the temptation to spend money in other areas may be reduced. If you know that a particular savings amount is dedicated to your child's future or your comfortable retirement, for example, you are less likely to spend the money elsewhere.
There are often policies available for specific types of savings goals, too, like saving for college.This can help even further.Another way to stay on track is to hire a financial coach or an independent financial adviser, who can work with you and help you achieve your goals, he said.Staying committed to a financial plan also boils down to having the right state of mind and building the right habits. Again, it’s about asking yourself what is best for you and what you can do to maximize your savings. For many people, it may be a two-step process, comprising of how much one can save, and how much one must save. The second may look sketchy at the outset but think again. It's the one that can make your money grow faster.
Executing the plan
Once you have crunched the numbers and know how much you want to save, the next step is to determine what you must do in order to save that amount. Here are some options that might help you:
Regular saving:Bank deposits and similar short and medium-term accounts are good examples.
Regular savings and protection schemes: Mutual funds and life insurance programs give you the opportunity to see your money grow, while protecting your standard of living.
Life insurance: Protects you and your family, and with additional optionalbenefits, such as critical illness coverage for example, it can also safeguard your income and wealth.
Diversified instruments: These help in making funds more accessible and controlling an investor's risk exposure.
Automated savings: Instructing your bank to immediately take out the amount and lodge it in your preferred savings or investment instruments is a convenient way of saving regularly.
Have a monthly budget: Only keep enough cash to meet your living expenses for the rest of the month so as to resist the temptation to spend impulsively.
For personalized advice, you can contact us and one of our consultants will call you at your convenience to help you find the right savings plan based on your needs.