Saving money the right way is one of the best life skills anyone can learn. Truthfully, all positive or negative situations should never leave wise financial planners complacent about their situation. If you know how to save money on different occasions and situations, you will always have enough for emergencies and have access to a considerable amount of money.
Anybody starting their journey towards financial independence should learn how to save money effectively. Truthfully, learning this skill is painless, as you’ll see in these ten practical yet straightforward ways how to save money for any purpose.
1. How Much Money Can You Save Regularly?
To save money, you must first make money. You have a job that provides just enough for you or your family but does not give you enough money to save. For first-timers trying to save money how, recording how much money you can save regularly is the first step. Even if it’s just a small amount, set it aside.
After doing this for two months, you now have a record of your regular monthly savings. At this point, you can create a budget focused on different ways to save. Furthermore, you’ll have a clear picture of the amount of money you need to achieve your savings goal, especially if you have a time-sensitive goal (such as a regular loan repayment).
Truthfully, no practical way exists to make more money unless you take up additional part-time work or earn from your hobbies. Numerous ways to save money exist — as this list shows — but making money is a different but beneficial challenge anyone with a financial goal must go through.
2. Take Note of Your Expenses
You’ve been recording your income and remaining savings per month. Simultaneously, record all your expenses and calculate their final total amount. After two months, you’ll see the most transparent picture of your regular expenses, including items you’ve charged to credit cards, loan repayments, utilities, and others.
At this point, list down your expenses according to priority. For example, most Singaporean households will prioritize utilities, food, educational payments, investment and loan repayments, and leisurely expenses according to this order. With this hierarchy established, you can de-prioritize and significantly reduce your leisurely expenses.
By making sound deductions, you can make money you’re saving grow gradually than the amount you’ve set for the previous month. Truthfully, it can be challenging to reduce your extra spending on food, activities, and shopping. However, you can accelerate your financial schedule by a considerable mile thanks to adequate income and expense management.
Anyone performing these first two steps can establish their income-to-debt ratio. This is useful for knowing if your planned loan application is likely to put you in deep debt. If your repayments reach higher than 50%, we highly advise that you reconsider making a loan application.
3. Avoid Borrowing Unless Necessary
One of the most significant errors of most Singaporeans and borrowers worldwide is using a credit line or loan at any time because it’s more convenient. While it’s great to have installment payment options, it doesn’t mean you should make them your primary payment method.
Banks prioritize borrowers who have low revolving credit commitments and frequent use. Any borrower dependent on credit is likely to have low income. These borrowers’ credit scores degrade further because they are highly likely to default on all their ongoing financing.
The best way to spend money using credit lines or a credit card is to consider if the purchase is an absolute necessity. For example, your house had a siding issue, and you need to hire contractors to perform an emergency siding replacement. With a credit line, you can cover all the expenses and pay for it later. This is a great way to save money and make sure you’re handling your finances effectively.
4. Avoid Using Revolving Credit When Possible
Credit lines, credit cards, and any credit card that gives you “miles” or other free promotions are revolving credit. These have no definite final date of payment. Furthermore, you’re paying a regular membership fee above the repayments and potential interest you can get.
While revolving credit products help establish your credit score, they’re detrimental to saving money, especially if you can’t stop using them as a primary spending channel. If you have a revolving credit line, make sure you’re only using them when necessary. Don’t use them as your long-term payment method for everything.
To manage revolving credit efficiently, use a notebook or budgeting app to track all your credit card spending. In Singapore, banking applications from virtually every provider tracks your credit card activities once you enroll your cards in the system. This feature is helpful and one of the best ways of saving more money.
5. Separate Your Savings Account and Emergency Fund Accounts
Organization and a conscious effort to follow your new spending protocols will play a key role in saving money. Use your credit as a financial lifeline for huge emergency expenses you can access at any time. Additionally, separate your savings and emergency funds. Truthfully, you’ll be splitting your remaining cash into these two.
A savings fund focuses on helping you achieve your financial goals. On the other hand, emergency funds aim to give you a substantial monetary boost (in addition to your existing line of credit, if any) for medical accidents, unemployment, or any surprise or unplanned situation that requires additional financing.
Both funds require adequate spending, but the proportion depends on the saver’s priority. Some Singaporeans should save more money for their established financial goals and leave the remaining amount for emergencies. Individuals who can’t have peace of mind without a dependable emergency loan will likely prioritize their emergency fund above anything else.
6. Pay Debts As Early As You Can
You’re indeed saving money if you’re making a wise decision to use a personal loan to take advantage of a time-sensitive, enormous discount on items. However, it’s never wise to take on a loan without preparing. If you can pay your loan fast, you can save up on the tremendous interest you’ll often pay for a stretched-out loan tenor. Truthfully, it’s one of the best tips any financial expert can give you.
The smallest debt can give any borrower anxiety, especially during uncertain economic or employment situations. Furthermore, it’s always good to pay your high-interest, unsecured loan on time and fast. For example, paying your licensed moneylender back as fast as possible helps you lower the possible interest you can incur and pay for.
Anyone contending with multiple debts should avoid focusing on saving money. Instead, they should focus on repaying loans with higher interest rates. If your debt situation is detrimental, you’ll only stand to gain working with debt consolidation companies. These parties can negotiate on your behalf with your creditors. Then, you’ll only need to pay low-interest financing to help you get out of debt and recover your credit score.
7. Spend Plenty of Time on Research
For any borrowers looking for a good deal, the internet is their friend. However, it takes some knowledge to find the best interest rates and loan amounts that won’t break your back. When you compare loan rates diligently, you’re likely to save more money, take advantage of offers, and start saving as you benefit.
Fortunately, the internet makes it easy to find available loan comparison websites between Singapore’s banks and licensed moneylenders. Furthermore, these websites list each financial institution’s terms and conditions for the researcher’s convenience. Write down essential data, which you’ll pour over later to make a careful analysis and make a wise financial decision.
However, you’ll not save on low-interest, high-amount loans through comprehensive research. Additionally, you can find excellent timed discounts, freebies, coupons, and other promos to help you save money. Luckily, many establishments list down their mechanics, enabling you to create an accurate and useful budget.
8. Maximize Your Home Equity
When it comes to collateral or debt, it pays to know your properties’ equities. The appraised value of your home, cars, and other high-value properties can lower your interest rates when applying for a loan. Additionally, if you’re deep in debt with an unsecured loan, you can use home equity as collateral to pay an enormous chunk of your entire loan.
Introducing residential and additional collateral for your unsecured loan won’t change your current unsecured and high interest rates. However, the lower remaining balance you’ll need to pay regularly is easier to manage than before, even with additional interest rate payments.
However, make sure you consult with third-party residential appraisers too. Bank-provided appraisers can sometimes commit an error. It always pays to have an extra pair of eyes and knowledge to look through and see the full worth of your property. Doing this guarantees, you’re maximizing your home’s equity.
9. Access Your Pension Savings Early
Singaporeans contribute automatically to their Central Provident Fund (CPF) account when they receive their regular paycheck. The CPF accumulates and grows the cash of Singaporeans, which they can withdraw only upon a certain age until retirement. Most citizens only remember their pensions once they’ve reached withdrawal age, but most don’t know that you can borrow against your pensions.
Early CPF withdrawal is possible if it’s a:
- Medical emergency
- …Or you’re permanently leaving Singapore (this is a complete CPF withdrawal)
Truthfully, Medisave accounts make it possible to address high emergency medical bills, which you can pay through your monthly automated contributions.
However, even if you can borrow extra money from your CPF (assuming you already have a Medisave account), make it a point to avoid high expenses. Create a definite plan on getting yourself out of debt for the long term. Once done, continue with your plan to save more and contribute back to CPF.
10. Remain Consistent With Your Plans
It’s one of the most cliché advice anyone can give: if you’re saving for the future, remain consistent and conscious of your plans. Anyone can begin their savings journey with minimal hiccups. However, the real test is when you’re feeling the restrictions and limitations, which ask you to discipline yourself in all your endeavors.
Truthfully, it’s challenging to maintain your motivation and remain constant in achieving your objectives. However, enduring and feeling every single struggle of the process can push you further and hurtle you onwards until you’ve adapted to it. Once you’ve accepted that your current fiscal situation is your status quo, you can start saving without realizing that you’ve already achieved your fiscal goals.
If You Plan Carefully, Financing Products Become Your Friends
The road towards your financial goals is rough but mapped out. With a plan and these 10 tips to help you save, you’ll find yourself in challenges that will take willpower and motivation to resolve.
Loan product comparison and in-depth policy-reading are essential to help you find the best interest rates and offers in the market. If you have yet to find a dependable financial institution or are planning to recover your troubled credit score, you can count on A1 Credit for a quick-release personal loan.