You may be familiar with the 10% savings rule.The idea is that, as soon as you are financially independent, you should save approximately 10% of your income for retirement, and it is a general guideline that gives you a starting point for your savings early on in life. If you consistently save 10% of everything you make from your early 20s, you should be all set for a happy and healthy retirement.
However, you may need to go the extra stretch if you only start giving serious thought to your retirement later in life. Everyone's financial situation is different and has its own considerations, depending on age, income, family obligations, and lifestyle choices. The 10% savings rule may not apply to everyone, but saving 10% of your salary, or any amount regularly, is certainly better than nothing.
If you're unable to save 10% of your income, don't be discouraged — the important thing is to set a savings goal that you can achieve. You can always increase this amount when you are in a position to do so. Alternatively, if you have a luxury lifestyle and have always been used to earning a healthy wage to support it, then you may want to consider saving much more than 10% of your income to maintain your way of life.
However, there are also different options, such as downsizing or changing some of your spending habits after retirement instead. These are all aspects that can be discussed in a meeting, so that you can weigh up your priorities and make decisions for your future accordingly.
In many cases, it can take around 90% of your energy and income to make ends meet, and the last 10% is where you can build your wealth. Think of it like doing exercise — the first 90% is just the warm-up and the last 10% is where the real workout happens for you to make progress.
Some people argue that this 10% is not just about savings, but it's also a question of how you apply your energy. If you want to go the extra mile in achieving financial success, you may want to use your last 10% of energy each day to improve your financial intelligence and control expenses. Basically, accumulating wealth requires putting in that extra 10% of hard work that takes us past just being comfortable. You may not want to spend your evening after a day at the office reading investment strategy articles or fixing the leaky faucet to keep expenses down, but these are the type of small contributions that will accumulate towards your future financial freedom.
The principle is that wealth is built at the margin, and most people can only dedicate 10% of their hours towards their financial freedom. But by reviewing how much of your effort is spent maintaining current lifestyle needs versus achieving your future financial goals, you can look to refocus your energy where possible. The higher the percentage of time that you can dedicate towards your financial freedom, the bigger the impact on your future. A series of incremental changes can multiply your gain, thereby creating financial success at the margin.
If you want to discuss how you can best make small changes and save for your future, do not hesitate to arrange a meeting for some personal training to help you get on track. Think of it like starting a work-out regime — you just need an appropriate fitness programme to guide you towards good financial health.