Every July (National Savings Month) we are reminded how important saving is, but by September most of our good intentions have fallen by the wayside. How can we prevent that from happening this year and commit to financial resolutions that stick? The first step is letting go of some common savings myths. Successful savers do not fall prey to these common myths that lead many of us to delay – or give up on – saving.

Myth 1: Saving is about what you earn

While we all like to believe the ability to save is linked to earning more, we all know some high-earning individuals who live pay-cheque to pay-cheque. The reality is that saving is not so much a factor of what you earn, but a factor of the difference between what you earn and what you spend. Anyone can save, and the first step is to take a long, hard look at your expenses and see where they can be curbed. As Warren Buffet famously said, “don’t save what’s left after spending, spend what’s left after saving.”

Myth 2: Saving is for retirement

Realise that you will not only need savings one day, when you retire. You could need it tomorrow (when you need to cover medical expenses out-of-pocket), next month (when the wheels on your car need to be replaced), next year (when you want to take that holiday) or three years from now (when you get retrenched). Without a safety cushion to fall back on, or a nest egg for your big-ticket items, you are far more likely to overspend and incur expensive debt.

Myth 3: The bank is your best friend

Your money should always work for you. Unless you are outpacing inflation, you are effectively losing money and any savings that are left accumulating in an ordinary bank account will not be keeping up with inflation. In the short term, this effect is less pronounced, but in the long term it can be devastating. Be sure to invest in a savings vehicle that matches your investment horizon. In the short term, stock markets are volatile and you could lose money. In the long term, shares and listed property are the only asset classes that beat inflation.

Myth 4: You can catch up later

Much has been written about compound interest, and it has even been called the eighth wonder of the world. Unfortunately, compound interest really needs time to work its magic. By putting off saving until you “can afford it”, you are losing out on one of the most powerful forces in the investment universe. The sooner you start, the better, even if the amount seems small.

Myth 5: Saving can wait when “life happens”

Saving should be a mindset, rather than something you do when the time is right. There will always be “good reasons” to postpone saving and we are often side-tracked along the way. Most of us blame misfortune (losing a job, not getting that raise) or market corrections for our failure to arrive at the financial position we’d hoped for. But while most of us fail – South Africa’s savings rate and provision for retirement is worryingly low – there are some that succeed.  The difference is that they make saving a non-negotiable part of their everyday life. When you achieve a savings mindset, you will find a way to save no matter what curve balls life throws your way. It may seem like a sacrifice today, but it could make a big difference to your financial security in future.

Stay committed

Sometimes, our financial goals seem so unattainable, we give up even before we begin. Saving for retirement may be a case in point. “Achieving financial goals, no matter how grandiose or unlikely they may seem, starts with quantifying how much you’ll need and by when. Often, seemingly impossible targets just mean we have to try harder and work harder,” says Lansdell. In the long-term, the power of markets and compounding work in your favour helping you achieve your goals – provided you have the patience to remain invested.

Marilize Lansdell is CEO of PSG Wealth