Savings always high fashion

Tuesday, 18 November 2008 00:00

Was your first memory of money positive or negative? Mine was positive, I remember saving $1 per week for 1 1⁄2 years which eventually gave me enough money to purchase the push bike of my dreams. It proved an important lesson both for the delayed gratification aspect of saving and the positive feelings toward money.

Other people have told me stories of a negative nature such as household arguments based around money when they were growing up. These experiences both positive and negative will shape our finance attitudes into the future. Some will use the current Global Financial Crisis as confirmation of their innate fears with money while others may view it as an exciting opportunity. The pessimist looks back where the optimist looks forward.

My hope is the current financial climate will encourage a return to the concept of saving for the future rather than borrowing for today.

Remember School Banking, Christmas Club accounts and “Lay Buy” - all gone the way of the typewriter. Instant gratification seems to have replaced regular savings.

A car is often a good indicator of our money habits. Given a car is a depreciating asset it seems crazy that many people borrow money to purchase them and keep borrowing to upgrade them. The real challenge with car ownership is to drive the cheapest car your ego can afford for the longest time possible.

Superannuation is the optimal strategy for long term savings. As asset prices rise and fall long term superannuation savers invest regularly unconcerned with short term returns only the long term result matters. In fact this financial crisis provides cheaper purchase prices for super savers all in a low tax environment.

So let’s get back to the basics... saving money never goes out of fashion.

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