Want to earn more? Save more.

A person who earns $5k and spends $4k has the same money as someone who earns $3k and spends $2k.

The equation is simple. If you really want to ‘earn’ more, you need to ‘save’ a little more.

But as simple as it sounds, most people would put off savings with reasons such as “I do not have enough!” and the most common statements that follow are “I will start saving when I have more money”, “I will save when I get my next pay increment”.

To assess if it is really true that you do not have enough, imagine the following:

• your parents need you to contribute an additional $100 to the household expenses
• you need to pay an additional $100 in taxes
• It’s your niece’s birthday and she really wants a Barney plushie
• it’s your best friend’s wedding
• your favourite band is in town and the concert cost $100.

The question is – Would you be able to afford the additional cash outlay? If the answer is yes, then it is likely that you are able to save something/more.

More importantly, a dollar that you do not spend is not just a dollar saved.
If you set aside $100/month now, you should be able to grow your savings to $83,712 after 30 years (at 5%p.a.). But delay saving by 10 years and your savings would drop to $41,633.

Start early & you make time and compound interest your ally.

Also, if you are currently new to the workforce, your current income is likely to be the lowest that it will ever been. Develop the right habit now, and the rest would be a breeze.