Other Competing Goals

swisscash 

 

Hi Folks, last time we talk about 5 ways to keep your savings. Of course, there are other things that we are paying throughout our savings.  The payment of cars, house, loans and other stuff that are preventing us from savings.

All these other goals, wants are just screaming for a piece of our cash pie.Which one gets the money? And yet another reality is that some unexpected things will crop up, divorce but it happens. No one gets married with the intention of getting divorce, but it happpens.Once it happens, you have to deal with it. Often time, it will cause a major drain to your bank account.

 Lets see what these realities of life are and how they can affect your retirement savings.

 1. Buying a House

This is the main major expense that people spent which is the mortgage payments. They often take away at least 30% of the salary. And thats a lot of money for 1 item.  If we add another 20% for settling other debts such as the car loan, that leaves only 50% over to live and do other things including our retirement fund. This explains why most people never have enough money to save for anything, let alone their retirement.

2. Unexpected major financial expense

If anything is for certain, some unexpected financial expense will crop up at one time or another. So, perhaps, we have to expect the unexpected! Statistics have shown that 75% of families would have some major financial expense in any ten year period.

What can these be? A lot. Pregnancy ,loss of job, repairs to a home, car or major of appliance, accidents and of course, death of a major breadwinner. These affects live tremendously, which will obvioulsy include the retirement plans. 

3. Divorce

Yet another reality is divorce. As i have written above, no one gets married with the intention of getting divorce.(Maybe no one except of few Hollywood Personalities). A divorce is always a bad news. Everyone loses and everyone is hurt in more ways than one.

 But it happens. And as much as it hurts, sometimes divorce is a better alternative (would you prefer to argue everyday  and live miserably with  someone you do not love anymore for the rest of your life?)

  And of course, divorces affect finances immensely. Many  miilionaire became exmillionaire after costly divorces. Estates that took years to build  are split in half, with the lawyers are taking a fair chunk out. And obviously, retirement plans are thrown haywire after divorces.

4. Inadequate insurance coverage

A lot of people have an inadequate insurance coverage. Some do not even have insurance at all!!  As a result, when a catastrophic accident occurs, such as fire burning down the house, they lose it all. They lose the house which is already bad. But now they have to start all over again as the house was not covered by insurance. This will create tremendous pressure on the financial situation of anyone. At that point in time and for the next few years at least, saving for their retirement  would be that last thing on their mind.

5. Loss of assets held in joint names

Some people hold assets in joint names, such as husband  and wife or father and son. The purpose of doing  this is:

1. To enable both parties to claim ownership to the asset

2. To ease the processing of transfering the asset to remaining owner should one party dies

3. to protect the assets from creditors.

Unfortunately, this sword cut both ways. If the other party is declared bankrupt, the asset can also be affected.If creditors sue one party and claim ownership to the asset, it can result in massive problems for the other party. In fact, assets have been lost because they were held in joint names.

6. Frequent Job Hopping

Some workers tend to job hop a lot. While to change employers every few years or so is normal, to do so regularly may not be to the workers advantage.

The main purpose of changing employers is because  of the better pay and benefits offered by the new employer. However, many employees leave for less pay and benefits. Some actually, leave employment without having another job offer in place at all. They leave for reasons such as disatisfaction with the employer, not getting along with fellow employees because of work preassure.

One of my friends told me that some drivers in his company last for only one or two months. As they find the company’s culture of working hard something alien, they leave even if they do not have another job elsewhere yet. That means there are times when they do not have any income and therefore do not contribute anything to the pension fund or retirement fund.

7. Extended periods of no income

There comes a time when an individual goes through a period of no income. This can be due to a temporary disablement, being fired from their jobs, retrenchment or done voluntarily. This period can be for months or years.

So we have to prepare for all this uncircumstances so that we can prepare for our fund throught out the period.

8. Tendency to spend all the income to maintain the lifestyle

I believe most of us have a tendency  to have a good lifestyle.I can say  this is normal especially those living in a main city. We tend to  use all our cash to maintain our cozy, comfortable  and often posh lifestyle. If we can afford a BMW 5 series, than that will be the car that we will be driving. Although we would do just as well to buy the 3 series, few would choose the smaller car.

So its better to have a cheaper car yet comfortable and stylish. Again, what are we competing for. We are just satisfying ourselves!!!  For those who wants to maintain a levish lifestyle will have 2 loses:

1. Leaves us little cash  to spare for our old age

2. makes it difficult to adjust a lower lifestyle after retirement.

So that’s all for the 8 competing goals for us to know. Its already too much!!!.

On the next article, i will write more on ” Why we need money So much!!!”

 

 

 

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