The idea of saving money is great, but how do I make it happen?
- Credit: Sonya Duncan
Just when you thought it would meander along, life has a wonderfully endearing habit of yielding something completely unexpected, even livening up those occasionally stultifying 'get-togethers' that were in danger of become a chore.
Over the past few years it's become clear to me that as you get older the nature of birthday celebrations gradually shifts, eventually turning full circle and becoming significantly more fun.
Most of us grey-hairs have experienced plenty of booze-drenched parties that ended with someone doing something outrageous or stupid. Or both. I recall… ah, you don't want to know; it was daft – and why would you go skinny-dipping in freezing cold water anyway, only to be greeted by squeals of female laughter when you emerged?
READ MORE: What's the point of saving money if you don't put it to good use?Our earliest memories of birthday parties might be a tad sketchy, but I suspect that as four- or five-year-olds, many of us were dressed in best bib and tucker and told to behave when ushered off to enjoy ourselves.
Fortunately, this is not the brief underpinning most of the celebrations I've attended recently. Over the past 12 months, my wife and I have been invited to 'significant number' birthday parties with themes ranging from 'vicars and tarts' to 'Mexican bandits', the latter an excellent excuse to don that ridiculously-wide sombrero bought in Spain more than a decade ago.
Earlier this month, we were celebrating a friend's 'Big Six-O' at a club where the theme was 'Seventies funk and Sixties soul'. Cue flares and multi-coloured shirts with enormous pointed collars. No wonder the vintage sections of charity shops do so well. We were strutting our funky stuff on the dancefloor when a joint favourite tune, Bad Luck by Harold Melvin and the Bluenotes, belted out of the speakers. It contains a couple of lines that raise a smile, not least because they're repeated immediately by the backing vocalists.
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Cut down on drinkin'
(Chorus: Cut down on drinkin'),
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Cut down on smokin'
(Chorus: Cut down on smokin')
They sound remarkably like the sort of self-administered, kick-up-the-backside talking-to we occasionally give ourselves, in this case following a particularly heavy night, although the lyrics actually refer to Harold Melvin's response to a cash shortage.
I prefer the first interpretation, primarily because the talking-to, especially in respect of smoking, always failed, at least for a while, until I was ready to do something about it. Once I decided to be specific, in this case about a date when I would stop, it was very easy to pack in; I used to smoke 30 a day, but haven't had one for more than 30 years. Nor have I missed them. What, you may ask, does this mini-memoir have to do with savings and investment? Everything. Bad Luck is one of those tunes that stay with you for a while and it was there as I wrote the introductory notes to this article with the idea of focusing on how to establish investment targets. In short, only you can do this.
Holding a vague belief that to 'cut down on smokin' would be a good idea might be accurate, but unless you say 'I'm going to stop on Wednesday and never have another cigarette,' it's unlikely you will succeed. Adding a financial incentive never does any harm either. 'If I stop smoking next Wednesday, I'll save £50 a week, or £2,600 a year, enough for x,' is a marvellously persuasive way of ditching cigarettes. And so it is with saving and investment.
Everyone acknowledges that saving money is a marvellous idea, but if it's little more than a vague notion, six months can pass before you've done anything about it. This is where establishing investment or savings targets comes in.
Instead of paying lip-service to the concept of saving, you must take quantifiable action: 'I'll start saving £150 a month into an ISA on my next payday. Now, who do I contact to make it happen?'
MORE: Is it really possible to retire at the age of 40?Humans thrive on setting themselves targets; tell yourself you'll start saving a specific amount and take action to expedite the same and you'll succeed. Once you've done so, you may wish to thank Harold Melvin and Teddy Pendergrass (the man who sang Bad Luck).
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Peter Sharkey read economics at the University of Bristol. He worked as an accountant on three continents and has been a company director and investor for more than 30 years, building and selling three different companies.