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I have NO savings!
By Derek  •  January 26, 2012
[caption id="attachment_2949" align="alignright" width="150" caption="Photo by Nieve44/La Lu"][/caption] There have been several articles on savings recently which got me thinking. First thought - why 20%? Who defines this standard and why is it recommended?UScitizens have always been known to be big spenders rather than savers. It is their money that kept the world going at least during the end of the 20th century. If local advisors are advocating 20% savings, what about advisors over there? 5%, 10% or spend what you earn? Wiki defines savings as income not spent, or deferred consumption. Does saving money to buy a Hermes bag constitutes as savings? After all, it is delayed consumption isn't it? In that case, I can say I am saving 50% of my salary monthly so that I can buy a Hermes bag. The same can be said for saving for a car, house, travel, children education, retirement, investment etc. It makes me realize that it doesn't matter how much you save but what you do with your spare cash. You can save it (deferred gratification) or spend it immediately (instant gratification). Either way, I see no wrong in it. What’s important is to have a sound financial plan in place to achieve your financial goals. I am going to stop categorizing savings in my income portfolio and use terms like retirement fund, emergency fund, marriage fund etc. which are more meaningful.
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By Derek
Derek is an investor who follows Peter Lynch style of investing. He prefers to use simple and straight forward information for stock analysis. He started TheFinance.sg with the intention to bring together all bloggers and professionals who are interested or already in the area of Finance and Investing, and to create a community where everyone is free to write and to share their articles, experience and opinions.
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9 Comments

9 responses to “I have NO savings!”

  1. We either spend our saving sometime later or let someone else spend it for us as we can’t bring it to next “world”.

    • Derek Lim says:

      Hi Bro8888,

      You are absolutely right. Savings are meant to be spent anyway so does it matter if you save little by spending now or save up a lot to spend later? What’s important is your financial goals rather than comparing how much you save.

  2. Guru says:

    If I have ” savings”, I will use it to clear my car debts or other outstanding loans. Savings if use for delayed gratification is no difference from using interest free installment, buy and pay later..

  3. Jared Seah says:

    Hello Derek,

    Welcome to the shades of grey!

    Sometimes black and white terminologies hinder more than help. Just as long we understand the “true nature” of our actions, we don’t have to answer to others.

    Taking a holiday can be a “waste” of money to some (you come back without tangible assets); but to others, it’s money well spent to understand ourselves (are we adaptable to change and new things).

  4. Derek Lim says:

    Hi Guru and Jared,

    Welcome to the world of zero savings! :)

  5. Patrick SEE says:

    Hi,
    Savings and discipline goes hand in hand! The long term objective is to retire early with a comfortable income from Earned income, Property Income and Portfolio income.

    The journey of a thousand miles begins with a simple step. And that step is to start saving! With sufficient savings come investment, building a diversified portfolio income till you could invest in a property thats reasonablt and comfortably priced.

    Through a combination of passive and portfolio income, where the income generating assets are greater than your expenses in your cash flow statement, you will have a sense of safe and solid retirement. Any inputs?

    • Derek Lim says:

      Hi Patrick,

      You are not wrong but I will rather not use the word ‘Save’. One can be a very disclipline saver, e.g. I save 50% of my salary in the bank but if he does nothing with the money in the bank, it will be difficult to meet his retirement needs.

      I will say that I put aside X amount into shares, Y amount into property, Z amount into money market etc.

      • Patrick SEE says:

        Hi Derek,

        Thanks for agreeing the same point on my para (2) or you have a different interpretation of my para (2)?

        Regards,
        Patrick

        • Derek Lim says:

          Hi Patrick,

          Money in > Money out = retirement.
          Sounds logical but I also have to consider factors like how much, on a consistent basis, time frame to achieve the goal and emergency expences.

          Cheers!

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