Do you have a force savings program? Or do you have a flexible savings one, where when you have extra money then only you save, and when you need money, then you take out the money that you have saved.
What is the difference between these two?
| Flexible Savings | Forced Savings | |
| Characteristic | Spend first, save the balance | Save first, spend the balance |
| Advantage | Have liquidity for short term goals. | Have adequate money during retirement years. |
| Disadvantage | Less money during retirement. Because you save money and also spend money, in the end there is not much money left. Need to supplement income during retirement years. | Need strong discipline to maintain a strong habit to save a fixed amount regularly |
| Risks | Inflationary risks or Purchasing power risks. Although savings money in a bank provides liquidity, the lower interest rate returns from banks will eventually lower the value of your money. | Market risks. Unit trusts provide good vehicle for you to perform forced savings. Risks are minimized in unit trusts by diversifications. |
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