According to the Nielsen Global Survey of Consumer Confidence and Spending Intentions Q1 2016, nearly 7 in 10 Singaporeans put some money away, making us the top savers in the world.
It doesn’t matter when or at what age you start saving. The fact is that saving money is the easiest way to get on that road to financial security. So, let’s get started on our journey.
1. Start now
You may have tucked away your pocket money or your ang baos (money-filled red packets) growing up, but that’s small change compared to what you can currently save – now that you are working.
By your 30s, you should be in a more stable phase of your career, so your potential for greater savings is higher. The key is to avoid the temptation of lifestyle inflation. Just because you earn more, it doesn’t mean you have to spend more.
Stick to that habit of saving that’s been instilled into you as a child. It’s a legacy worth maintaining!
2. Start small
Heard of the Singaporean man who saved S$6000 in two years just by putting away S$1 coins? The adage ‘money saved is money earned’ holds true, after all. It’s a sober reminder that small change can make big changes to your finances. You may have heard of the Change Jar – a container you empty your change into every day or at the end of the week. Many have tried it and have been surprised by how much they managed to save.
Another way to start small is to make small shifts in your choices. Swap the designer coffee (S$8 a cuppa) for your local coffee shop brew (S$1.20). At five drinks a week, you’ll save over S$1,600 a year.
If you put away S$1,000 a month, in 10 years, you will have over S$100,000. That’s just pure savings alone. It may seem like a hefty sum to save, but as your income rises, you will feel the pinch of saving more a lot less.
Did you know you could even save using a credit card? If this is news to you then you should probably read this!
3. Start smart
One smart saving move is to create different pots of savings for different purposes.
An Emergency Fund should be your first pot. Financial consultants advise that you need about three to six months of expenses (what you need to live on from month to month) at the ready. This ensures that even if something untoward happens, you will still be secured. However, while this is sound advice, not everyone has enough in their savings to last them that long.
Another pot of savings should be for your children’s education, which can get very expensive especially if you want to send them abroad. Set up an Education Fund the moment your child is born. Several banks offer education saving plans.
Think of financial stability in your 30’s as your destination and saving as that first, albeit small but hugely significant, step towards it.
This article was first published in The Bank Bazaar.sg