Oran H. Hall, Contributor

Question: I've been reading your articles in the Sunday Gleaner for quite some time now and, like most of your readers, I am in need of some advice. I'm a recent university graduate currently working in an entry-level job where I earn J$40,000 per month. I am a living example of the proverbial Jamaican saying 'bend the tree when it young'. As I am now 22 years old, I find it very hard to save. I have the urge to save as I realise the importance, but I seem to be lacking in the area of will power. I have only three constant expenses per month which are to the tune of $9,000. Everything else is dependent upon my compulsive habit to spend.

I currently have two bank accounts. I'm soliciting suggestions as to how to overcome my current slump. Also, is it possible to invest with my remaining $31,000? Hopefully, you can offer suggestions as to how much to save/invest.

- Robert

PFA: You are quite young and have many years ahead of you. Do not blame your current attitude on your past. Few people are in a position to begin a savings programme before your age. It is clear that you know what to do. Just do it.

You are blessed. Count your blessings. Most persons your age have far more expenses than you. This state of affairs will not last forever, so make hay while the sun shines. It would be a good idea for you to establish a life plan.

Outline where you want your life to be in the future — in five years, 10 years, and so on. Determine what you need to do to get there. Get an idea of how much will be required to get there.

Remind yourself that you will one day have more responsibilities than you have now and that they come with a cost.

Tell yourself that the more you put aside now, the better able you will be to take care of those responsibilities when they come.

Let the power of compounding work for you. The later you start to save, the more you will be required, to save to be able to do the things you will need to do.

Work on curbing your spending habit. Ask yourself if you are getting meaningful value from what you are spending your money on. Ask yourself how long the satisfaction you get from a bout of spending lasts.

If the satisfaction you perceive you get is transitory, you know it is not worth your money. Make a spending plan outlining how you will spend your income.

Stick to the plan. Do not buy what you do not plan to buy; avoid impulse buying. Avoid places where you are tempted to spend. Have as little cash on your person as possible.

If you have a credit card and it is adding to your troubles, part company with it. Avoid the company of persons whose company encourages spending.

If you save, you will have money to invest. You can start small. If you invest consistently, it will add up, especially over the long term. As a beginner, it is best to avoid the more difficult and risky investments.

The unit trust is a good starting point. It is easy to buy and easy to sell although you should not be concerned about selling too readily.

There are money-market funds and other fixed-income funds and capital-growth funds, but these are more risky so you may wish to wait a while before making that move.

If you wish to invest in currencies other than the Jamaican dollar, mutual funds would be a good option.

Investing directly in the stock market should wait until you have a better grasp of the market and are ready to deal with the additional risk, associated with such investments.

Determining what portion of your surplus funds to invest and what portion to save is a matter entirely up to you, but bear in mind that investing is a long-term matter so it is best not to commit funds you will need in the short-term to an investment programme.

That is not to say such funds should be left in a sterile situation where they are not earning some income for you. The plans you have made for yourself will have a strong bearing on your investment decisions.

Congratulations! You have started a savings programme — with two accounts. That's a good start. Keep it up.

Just bear in mind that a savings programme is not an investment programme.

Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of 'The Handbook of Personal Financial Planning', offers free counsel and advice on personal financial planning.finviser.jm@gmail.com