It is well known the current savings under TAP will be inadequate, no matter how hard my former investment officers at TAP work to get good returns. The amount of contributions are way too small. So you have to take up the retirement savings slack yourself. This can be done via many Small steps which surprisingly can make a big difference over the first 10 years of a working life.
The easy stuffs - not so easy but easier than the harder stuffs which you will read later on:-
- Stop taking coffees at Starbucks (oops, no Starbucks in Brunei), Coffeezone then. According to NYT, saving $3.50 a day will let you have about $11,500 in 10 years;
- Stop smoking - you will save $25,600 over 10 years;
- Learn to cook - any takeaway and fastfood restaurant will cost you about $10,000 over 10 years;
- Learn how to pack a lunch - this will save you around $23,000 in 10 years.
- Keep 10% of your salary in a savings account separate from the rest of your money - make sure it is not connected to a cheque book or an ATM card - in other words, make it harder for you to take it out, so you will be less tempted;
- Make sure you save money in a private retirement fund - forget TAP, forget insurance savings - put it in a proper retirement fund - the earlier you start, the more you have;
- NYT gave an expert bit of advice: Stick the money in the broadest stock index fund offered by your plan, not bonds and not a money market fund. Sure, the markets may stumble at some point during the next 45 years, but history has shown that they will rise over a period that long. You take risks when you are young;
- Ignore your raises every time you get a raise, and you'll get them because you are working hard instead of spending money you don't have, pretend you didn't get one. Bank in the entire amount (one of my PS says his monthly budget is still based on the assumption that his salary is $2,000 - he earns 9 times more now);
- Don't borrow to buy depreciating assets - since almost every consumer product from an iPod to a sofa is worth less the moment you buy it - Use cash and do not use credit cards or bank loans as you will pay more for something that is becoming lesser in value. If you can't afford it, don't buy it. (probably an exception is a car);
- Protect your credit - you will need to borrow later on so by having good credit history - the banks might be willing to lower their interest charges - and also pay all your credit card bills and carry no balance;
- Cut down your ATM withdrawal to once a month - take just enough cash to last you - you will cut down on incidental expenses;