Similar to many other countries Singapore was a witness to the direct and indirect effects of the pandemic. It has greatly affect impact the income of every individual. Developing healthy patterns of saving money is one of the most efficient methods to prepare yourself for the unexpected. But what steps can you take to do this?
Even though the growth in income may be falling behind the growth in the cost of living, it is still extremely important to save money. Try not to be taken aback or thrown off balance by the obstacles that life throws at you. In order to construct a robust plan for savings in Singapore, consider using the following tactics.
6 Easy Hacks on How to Save Money in Singapore
Start With a Simple Budget – Consider Adopting the 50/30/20 Budget Model
It’s important to emphasize that achieving substantial savings without effective budgeting can be quite challenging.
One of the most practical and straightforward approaches to kick start your savings journey is to follow the 50/30/20 strategy – often referred to as the intelligent method for financial management. According to this rule, 50% of your income is designated for essential needs, 30% is earmarked for personal desires, and 20% is directed toward savings.
When we refer to “necessities” and “wants,” there can sometimes be overlap, causing confusion. Necessities encompass the fundamental elements without which one’s life would become exceptionally challenging, including items like housing, sustenance, and clothing. On the other hand, “wants” encompass things that aren’t strictly necessary for survival but are desired for a more comfortable or enjoyable life.
As your savings accumulate, it’s not advisable to let your money sit idle without generating returns. Consider placing your savings in high-yield accounts or explore assets that can be easily converted to cash when urgent financial needs arise.
Make Every Dollar in Your Income Count
For beginners, there’s another highly effective method that has proven beneficial for many in Singapore. The primary aim is to allocate your entire income to specific categories and leave no room for impulsive spending.
To implement this method, start by identifying your spending categories and allocate a portion of your income to each one. Don’t stress if you can’t categorise every single expense at the outset, as the budget can be adjusted regularly, preferably on a monthly basis. Remember to include savings as one of your spending categories. To make saving money using this approach more straightforward, here’s a step-by-step breakdown:
Step One: Begin with your income (let’s say it’s S$5,000).
Step Two: Define categories and allocate the entire S$5,000. Here’s an example:
- Transportation – S$500
- Food – S$1,000
- Education – S$750
- Entertainment – S$500
- Personal Wants – S$1,000
- Savings – S$500
- Debt Repayment – S$500
- Emergency Fund – S$250
Step Three: Commit to spending only the money you have (live within your means).
If you happen to overspend in any category, make adjustments in others to maintain balance. However, avoid altering the savings category.
If you introduce a new category, it’s acceptable, but be sure to revise the allocations in other areas to accommodate the addition.
This strategy enables you to live within your means, foster savings, manage debt, and most importantly, prevent accumulating further debt.
Adopt a Strategy to Clear Debts
Achieving financial goals like saving money and paying off debts can be challenging, especially when you have limited income. To facilitate your journey toward debt reduction and savings growth, it’s crucial to follow a well-defined strategy, and we’re here to introduce you to one of the most effective approaches.
The key is to curtail unnecessary expenses and redirect those funds towards debt repayment and savings. For instance, you can cut back on expenditures for new, expensive clothing to generate extra funds for your savings account.
Begin by tackling high-interest debts as a priority, as they have the potential to drag you deeper into financial trouble. For instance, it’s advisable to prioritise paying off credit card balances before shifting your focus to unsecured debts.
If you find yourself overwhelmed by numerous debts and struggle to make timely payments, debt consolidation might be a suitable option. This involves combining multiple debts into a single, low-interest rate loan, making it more manageable.
If you need to borrow money, it’s essential to adhere to the principle of borrowing only what you can comfortably repay. Consider using loan matching platforms like MoneyIQ to identify financial institutions in Singapore offering low-interest loans.
Automate Your Savings
The lives of many people in Singapore can become quite chaotic, which makes it difficult to continuously allot money toward savings and put money away in a separate account. Take, for instance, the case of a family member who has to juggle various responsibilities at both their home and their place of employment. Because there are no fees associated with moving money into a savings account, there is a possibility that this vitally important financial step will be neglected.
In addition, some people find it quite easy to give in to the temptation of making a hasty purchase, whether they are browsing products online or walking around the city. When their available funds begin to dwindle, it’s possible that they will either cut back on or totally stop their monthly saves. The encouraging news is that there is a solution, and that option is to automate your savings. In order to accomplish this, you will need to open a separate savings account and set it up such that a certain amount of your monthly salary is transferred there on its own.
You might further discourage yourself from accessing these savings by reducing the number of times you can take money from the account or by severing the connection between the account and your ATM card. By doing so, you assure that any savings you have would be removed first, which makes it more difficult to retrieve such resources later on. By putting these strategies into action, you dramatically boost the likelihood of seeing your personal savings grow over time.
Develop a New Revenue Stream
Evidently, having more income at your disposal increases your savings potential. Engaging in a part-time job offers an opportunity to generate extra income alongside your primary occupation. For instance, if you’re a teacher in Singapore, taking on an evening part-time job can serve as an additional source of earnings.
You have the flexibility to allocate a portion or all of your part-time income towards your savings. Alternatively, you can manage it in the opposite direction, using your side hustle earnings to cover your expenses while directing your primary job’s salary into your savings. The choice is entirely yours.
When selecting a part-time job, it’s advisable to choose something you are passionate about. This is crucial to prevent boredom and maintain your commitment. For example, if you have a genuine passion for mathematics, working as a part-time tutor can be both enjoyable and fulfilling. Some of the most promising part-time job options in Singapore include:
- Blogging: Running a blog can be a rewarding part-time endeavor, but it’s important to recognise that it may take some time before you start earning from it.
- Part-time interpreter: If you are bilingual, you may have the opportunity to work from home as an interpreter, translating written or oral texts from one language to another.
- App development: If you possess programming expertise, numerous global companies are in search of professionals to assist with app development projects. Many of these assignments offer flexible working hours, allowing you to choose when you work, especially during your free time.
If You Must Borrow, Only Go to Loan Providers with Low-Interest Rates
While it is indeed prudent to minimize borrowing when striving to build your savings, it can still be a viable option when managed thoughtfully. For instance, opting for a personal loan in Singapore to fund educational expenses or consolidate existing debts, rather than depleting your entire savings account, can be a sensible approach. The primary benefit of using a personal loan in Singapore is the accessibility of funds with the convenience of repaying in installments. This method offers several advantages that are integral to your savings plan:
- You acquire the necessary funds to cover significant expenses.
- Repayment is structured in installments, allowing you to potentially repay without disrupting your monthly savings and emergency fund allocations.
- Since personal loans are unsecured, there is no risk to your personal assets in the event you encounter difficulties repaying.
When seeking a personal loan or other forms of unsecured credit in Singapore, it’s essential to consider options with low interest rates. Identifying such loans can be a challenge due to the abundance of loan providers in Singapore. This is where loan matching platforms like MoneyIQ come into play.
MoneyIQ simplifies the process of pinpointing the most suitable bank or financial institution. You can simply visit their website, complete a short application (which takes just a few minutes), receive offers from various loan providers, select your preferred option, and finalise the loan agreement.
Read Also: Best Moneylender in Singapore
All that’s left is to adhere to the repayment plan. As highlighted in this post, saving money is undeniably one of life’s crucial aspects. Your savings act as a safety net during challenging times, guarding against issues such as debt and financial stress. Employ the strategies outlined in this post to make the process of saving money both enjoyable and rewarding.
