How you can Spend less Money – Top 5 Saving Tips

The biggest assumption produced by writers who encourage their readers to invest is that the readers' have adequate capital to invest. For many young Singaporeans just entering the workforce, there is limited income to begin investing with. Also, there are tertiary education loans to pay off, #adulting obligations (i.e. giving parents' allowance) to satisfy, that makes it hard for these to save.

Before anybody can begin working towards loftier financial goals, because the Chief Financial Officer (CFO) of the wealth, we have to first realise why you should start saving more money, and the 5 easy steps to help you begin saving towards your financial targets.

Why the need to save?

At the beginning, you can easily defer the choice to save more before you earn more. It is not easy to save a substantial part of your earnings whenever you earn a low salary. In the end, our fixed expenses on necessities really are a bigger proportion of our pay whenever we start.

While the outcome of saving may not be immediately gratifying, the entire process of budgeting, understanding trade-offs in spending/saving and reviewing your personal income inside a disciplined manner is a habit that may help you in the long run. Much like exercising, it's simpler to start small and early. It's less financial demanding to begin managing your money well, than to later on manage the finances of ones own in the get-go.

Tips to assist yourself save more money

1. Set realistic timelines and targets

Identify your aims with regards to the outcome: this may be going for the perfect getaway (when we can travel again), having the ability to afford your required BTO, buying a nice watch, bag or shoes. Identifying these goals keeps you motivated, seeing that your discipline has something tangible to become rewarded with.

Apart from immediate targets, consider aspirational goals such as financial freedom, capability to give back to society and legacy planning. Setting both short and long term goals makes it much simpler for you to to feel some kind of gratification, no matter how big or small it's.

2. Start planning – use a budget as guidance

Know just how much you need to save to satisfy your goals, then you will be able to work backwards to find out the utmost that you can spend to reach your savings goal. Then breakdown your spends into different buckets. This helps to ensure that you don't overspend and rationalise your expenditure. Here are some tips on managing your individual budget, summarised from an Endowus article.

3. Automate to keep you disciplined

Let's ensure that it stays real, financial prudence for longer-term goals is neither immediately gratifying nor something we prioritise daily. To help us stick to our goals, we should setup automatic transfers to help us continue track.

A common trick used may be the “Pay yourself first” concept. Instead of spending our money, then saving whatever that is left (not much for poor savers), we are able to save our money first then spend whatever that's left. This is accomplished by setting up a recurring change in your planned savings to another banking account once you received your salary and spending money on your expenses with the remainder.

This is comparable to how CPF allows us to with financial planning where 20% of your salary is automatically debited – part of our salary can be set aside before using it to pay for your bills or buy necessities.

For our own budget, we must decide how much to create aside every month. This helps to ensure that you may be confident with your daily expenses and not set yourself for failure.

4. Get the best value, not only the cheapest

In a global where we are bombarded with marketing messages daily, we're influenced to obtain the latest, shiniest new gadget or product. This may be the most recent smartphone, sneakers or even investment trend.

Our thought process around saving is then often around getting the cheapest price using this cool product, rather than looking at getting the best value for the own needs.

Some questions to show you along making the best value purchase includes

1. Do I need this purchase? (Wants versus Needs)
2. Is there a cheaper alternative that may serve your needs or wants?
3. Are there any hidden or recurring costs which i have to be conscious of?

5. Review your goals and budgets periodically

A plan should persist as long as the assumptions behind it remain constant. Our income, expenses and financial goals are likely to change a minimum of annually.

Similar to how CFOs review their company's annual budget, you should broadly track your spending against your planned budget. After identifying any significant deviations, you should be able to understand the reason for the deviation and consider ways to circumvent it.

With all these tips in mind, you might consider carrying out a recurring change in your money savings into Endowus Cash Smart, a higher-yielding, low-risk cash solution to assist you to pay yourself first, in addition to utilizing it for other emergency funds, short term savings goals. And since there is no lock-in period, you can withdraw your funds anytime for that goal you've finally attained to reward yourself.