How to save money: 10 money-saving tips you need to know
Maintaining the consistency and habit can be challenging, but here are some tips you can bear in mind!
Is saving (more) money your New Year’s resolution this year? Maintaining the consistency and habit can be challenging, especially when you’re not the best with numbers. But here are some steps you can take to improve your financial health and achieve your financial goals.
1. Set your savings goals
If you have no destination in mind, you can’t possibly chart your route. So, the first thing to do is to define your short-term and long-term financial goals, such as an emergency fund, vacation, or retirement. To make it easier to stay motivated and focused, you should also find out exactly how much you’ll need to save.
For the record, your emergency fund should be at least three to six months’ worth of your living expenses. If you spend S$2,000 a month on utilities, bills, food, transport and entertainment, you should have an emergency fund of S$6,000 to S$12,000.
2. Create a budget
After you’ve decided on your goal, you’ll need to check where you’re at now and plan a route. Start by tracking your income and expenses to understand where your money is going. You can also categorise your spending and identify areas where you can cut back—more details in point four.
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3. Automate savings
If sticking to your budget is difficult—some people just have the impulse to spend whatever’s in their bank account—you can set up automatic transfers from your checking account (or the account that receives your income) to your savings account. Limit yourself to only spend what’s left in your checking account.
4. Cut unnecessary expenses
To save more money, you can either increase your income or lower your expenses. If increasing your income is beyond your control, you can only work on reducing your spending. You should review your spending habits regularly and identify non-essential expenses. Some examples include dining at fanciful cafes or restaurants, monthly subscriptions that you barely use, and that daily cup of bubble tea or Starbucks coffee.
If you often regret your impulse buys, you should also take time to think about purchases before making them, especially significant ones. Ask yourself if the purchase aligns with your goals and whether it is a true necessity.
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5. Shop smart
Of course, there are daily necessities that we must buy. But you can scour for discounts, use coupons and promo codes, and compare prices before making a purchase. For instance, you can use Skyscanner to compare flight tickets if you must travel. Other options include buying generic or store-brand products, which are usually cheaper, instead of name brands, and buying reusable products.
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6. Cook at home
With the recent GST hike, dining out is becoming even more expensive. You can save money on meals by cooking at home and adopting the bento culture. By planning your meals, you can also buy your groceries in bulk, which often come with a discount or free shipping in the case of Amazon Fresh.
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7. Limit credit card use
Credit cards and Buy Now Pay Later programmes can be a boon or a bane depending on how you utilise them. You should use them responsibly and pay off the full balance each month to avoid interest charges. If you find it difficult to see the outflow of your money, review point two again.
8. Review your bills
Often, we’d just let things be because it’s too much of a hassle to make changes. But you should regularly review your bills to ensure you're not overpaying for services. This may include phone bills, internet bills, and insurance policies.
9. Invest wisely
One of the ways to save money is to make your money work for you. Rather than letting your money sit in the bank earning a meagre interest, consider investing your savings to earn a return over time. You can consult with a financial advisor to explore investment options based on your financial goals. Before you make any investment, don’t forget to do your own research too.
10. Learn and improve your financial literacy
To take your money-saving game further, you can educate yourself about personal finance and stay informed about investment opportunities, tax strategies, and financial planning. Saving money is a gradual process, and it’s essential to be patient and persistent. Consistency in your savings habits will lead to long-term financial stability.
