Retail therapy’ makes your future look sick, says Imara
Extended ‘retail therapy’ is under way in many families as summer sales prolong the festive splurge while Valentine’s Day promises to keep shop tills ringing even longer. However, the ringing in shoppers’ ears is probably a symptom of a sickening failure to implement New Year’s resolutions to save for retirement.
The comment comes from Imara Asset Management, South Africa, a firm consulted by a growing number of salary-earners who admit their retirement provision is inadequate and saving has stalled.
MD Lara Warburton says a little ‘retail therapy’ may lift post-recession spirits, but failure to call a halt and take control of spending can be fatal for saving.
Kicking the spend-spend-spend habit is a big challenge for many who seek retirement planning advice, says Warburton.
She notes: “Each New Year sensible financial goals are set only to fall away because the temptation of instant gratification proves too strong and shopping sprees continue long after the holidays.
“Apathy sets in. We then perpetuate the cycle of ‘like it, buy it, regret it’ for another year. However, it is possible to quit over-spending and put yourself into savings rehab – though you may need professional advice to do it.”
Warburton has some tips for those determined that this year they are not going to backslide. She advises …
- Get a boost by measuring gains. Financial progress is measurable. Set reasonable and achievable objectives. Complement long-term with short-term goals. Far-off goals seem unreal, but short-term goal achievement keeps you motivated. Ensure regular feedback on saving performance and debt reduction. Every time you reach a goal, give yourself a pat on the back – don’t go shopping!
- Get warm and fuzzy. You get this feeling when you can see your money is working while you sleep. Allocate some money to products known for solid, long-term gains. Seeing this money grow helps you keep the faith.
- Save first, not last. Channel money to savings via monthly debit orders. Cover household expenses as well. The money that’s left over is available for spending. If you spend first and try to save from what’s left, you may end up constantly complaining that you don’t have enough money to save.
- Get a tax break. This means sensible exposure to pension products and retirement annuities.
- Get smart. Canny savers maximise (and prolong) gains while limiting losses (often by timely adjustments to asset allocation). Expertise like this may entail a fee, but you end up a net winner if you achieve the right balance at the right time through the right advice.
Lara Warburton adds: “You can kick a bad habit in as little as three weeks. The time to start is now … before prolonged spending runs away with you.”
