For those who are debating whether to put aside that $200 or splurge it on a branded handbag or pair of designer jeans, perhaps the following story will tilt their decision in favour of saving it.

'A' and 'B' are 25-year-olds who have just started working and are drawing the same salary.

'A' prudently saves $200 every month for 10 years in a balanced fund comprising global equities and bonds yielding a conservatively estimated annual return of 5 per cent until he is 35, when hefty family commitments force him to stop saving. He stays invested with the accumulated sum of about $30,000. At age 65, this amount will have grown to nearly $300,000.

'B', on the other hand, leads an 'expensive' lifestyle during the initial 10 years and does not save any money. At 35, if he wants to accumulate the same amount of $300,000 by 65, he will have to set aside more than $200 a month in a similar fund every year for the next 30 years to achieve his goal.

The moral of the story?

Save and invest early. By harnessing young people's biggest asset - time - and allowing the power of compounding returns to work its magic over its long span, retirement funding should be relatively painless.

By delaying gratification when we are young, we will be in a much better financial position when we are older.

To help young people-and the not-so-young-ones save money, here are some tips:

1. Instead of eating out, have more home-cooked meals, which is healthier too.

2. Pay off credit card debts as quickly as possible, preferably with no roll-over. Credit card debt, with its exorbitant interest rates, is the most insidious of debts.

3. Use public transport. Owning a car sets one back at least $1,000 a month.

4. Start caring for your hair more often at home. Do not dismiss those $10 haircuts or heartland hair salons.

5. Instead of splurging on a new outfit or accessory, which you will probably only wear once or twice, consider sharing among friends?

6. As far as possible, buy house-brand groceries.

7. Cut back on electricity consumption at home.

Maria Loh Mun Foong (Ms)