There is no question that it is hard to save – and harder for some people than for others. While it might be prudent to save 10% of your income towards your retirement, not everyone has an income high enough to do this. A focus on saving often results in feelings of guilt, failure and inadequacy which lead to a vicious circle of saving even less, and feeling even worse. With a fixed income, it is the level of spending that determines how much is saved.

There are numerous articles offering critical advice on cutting out luxuries like coffees and smashed avocados on toast. Indeed, the weekly cost of these small luxuries when converted to an annual amount with a compound rate of return showing how much could have been earned if the money was invested, is a significant number, but not as significant as the big ticket items.

Look at anybody’s weekly budget and the big costs are housing (mortgage or rent), transport (car or public transport) and food. What is a reasonable amount to be spending in each of these categories? The problem is, many people don’t have good benchmarks against which to measure how they compare against an average household. What tends to happen is that people apply to the bank for a mortgage or a car loan and leave it up to the bank to decide whether the level of borrowing is sustainable. While it might be OK from the bank’s point of view, this doesn’t mean it is the right thing for the borrower. Banks should be acting in the best interests of their customers but how often are they doing this? Before you borrow money for big ticket items, look at the long term consequences of your choices and make sure you can still save.