5 Hot Tips That Allow You To Dramatically Boost Your Savings


 As a young working adult, managing your personal finance can be daunting, given today’s high cost of living.

No surprise there since Singapore is ranked number 1 again in 2016 as the most expensive city in the world (in a global survey for expatriates).

Well, all hope is not lost.

You can still achieve financial security by managing your finances and planning ahead.

These 5 personal finance tips will make it easier so that you can still spend on that dream holiday and not fret about how you are going to make ends meet.

[image credits: Gettyimages.com]

Tip #1: Follow A Budget

It may sound like common sense to follow a budget, but it is important to realize that your budget is the primary means to manage your finances.

A good start is to decide why you want to budget. It is not enough because you know it is the smart thing to do (and of course it is!).

For you to stick to your budget, you need concrete reasons and goals to work towards. Knowing and accepting why you are making compromises and sacrifices in spending makes it more likely for you to succeed.

It also helps you to effectively track your finances regularly.

Your budget enables you to check whether you are spending your money on the right priorities. It helps you spot danger areas where you are overspending and you need to trim excesses.

By implementing this practice (read ‘habit’ in the long term) to track your expenses and to stop when you are overspending, it will give you a much better chance at achieving your overall financial goals and security.

 

[image credits: blog.illinoisnationalbank.com]

 

Tip #2: Avoid The Debt Trap

Many people get caught by this because of the easy availability of credit. Well, take heed of this advice: you should avoid paying interest to other people, and earn it for yourself.

The rationale is obvious: you cannot build real wealth while you are borrowing money (read ‘incurring liability’). Of course, it is impossible to avoid debt especially when there are big ticket items such as purchasing a home, likely a HDB flat for most married couples.

But hey, that’s one-off.

It should not be a regular feature in your monthly expenses. Fancy that latest SUV model? Try going for a second-hand car or taking public transport as a viable alternative.

As for credit cards, yes it is so easy to sign off for your purchases. Some people even roll over their liabilities from month to month by paying off only the minimum amount.

This is financially unwise because of the hefty interest rates charged on the outstanding balance. If you really need to use your credit card, do keep usage to a minimum.

Make use of any discounts and credits offered by your card. Above all, minimize the use of your credit cards and pay off your bills promptly. With proper planning you do not need to incur any long term debt, except for that home loan.

Tip #3: Save For Rainy Days

Yes, you are young and there’s a full life ahead of you. But that’s precisely the point, a full life ahead of you. Do make an effort to save for that rainy day.

What, you say CPF is your savings plan?

Please, at the rate the retirement age and minimum sum are increasing, just treat your CPF as a bonus which you can claim later on.

The real savings is the money you save on a regular basis. Make it a habit to set aside money each month for your emergency fund.

How much to save? Ideally it should range between 6 months to a year’s income to tide you over when you lose a job or if some emergency (read ‘sudden heavy expense’) crops up.

Once you achieve this target, you should continue to save but use the cash to build up your wealth through investments.

[image credits: expertbeacon.com]

Tip #4: Decide Your Spending Priority

Different people have different goals and you need to decide what are your priorities are, so that you may align your spending with your own goals.

For instance, you may want to go for that exclusive Club Med holiday at the end of the year, so start making adjustments with your spending priorities to align towards that goal.

For others, they may have aging parents to look after, so start making use of various health insurance and MediShield plans to defray costs.

It is important to realize what is most important to you, so that you can align your spending accordingly.

Tip #5: To Hold Cash Is To Be King

If there is one thing I learned in all my years of living, it is this:

“Cash is king, no matter what.”

It is true in recession as well as in boom times. The bank is always hungry for your money, that’s why they keep asking you to invest in structured deposits.

Easy to hop on, but painfully long to realize your savings – you have been warned! Face up to the truth on who can really make money for you. It is not your banker, or your insurance agent, or even your financial planner.

Only you can make money for yourself.

You should make saving money a priority in all aspects of your life, and to actively look for the best money for value purchases.

All this is possible only with the realization that cash is king. Period.

 

[image credits: protocallgroup.com]

You have a savings goal to meet? Let these 5 tips help you stay focused as you head towards your target.

Share these useful tips with friends that are always going broke before the end of the month!

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