Beginners guide to grow your savings

The importance of personal finance should not be understated. While money is just a means to an end and not the end itself, with greater control of it, you will open many more opportunities for yourself. The first step in controlling your personal finance would be to start saving. If you are reading this post, chances are you are on the right path. Saving money is important as it can provide long term financial security, opportunities to pursue your dream, and even early retirement

So how do you grow your savings? Follow these 5 steps to guide you.

1) Setting Goals

First and foremost, you need to set a goal(s). Some common goals you can have, include having a wedding, getting a new house, savings for your children's educations, or even for early retirement. You can pretty much have anything as your goal. From there, you should work backward and plan on the steps to achieve it.

For example, if you are currently 25 and want to save $100,000 by 30. On average you should be saving $1700 a month over the next 5 years. After churning this numbers, you can see that this amount is quite significant. This shows why you should set your goals. With a goal in mind, you will be able to see if it is realistic and adjust your expectations. 

Do not worry, this blog will teach you how to save lesser than $1700 but still able to hit the target of $100,000 by 30.

2) Minimize spending

Is your Gym membership really necessary? Instead of gymming, you can consider exercising at home or at the park. This alone could potentially save you an average of $100 per month. 

To minimize our spending, we should identify our needs and wants. 'Needs' are things that are essential to our life. 'Wants' on the other hand are things that we desire but can live without. Once you have identified, cut down on those 'wants'. These are probably the easiest to cut down. For those that you are unable to cut, you should look out for alternatives or deals to reduce its cost.

Of course, it is good to treat yourself from time to time and spend on the 'wants' like occasional oversea travels.

3) Increase your income

Do you have free time? Why not earn some extra income? Here are some ways you can consider

• Side hustle - You can consider teaching tuition, doing deliveries, or even starting a small business at the side

• Paid Surveys - You can choose to do surveys on survey sites. In exchange for your time, you will be rewarded with points that can be used to redeem for cash. Some examples include YouGov and HappyDot. I have personally used both of these and would recommend it for some extra cash.

• Improve your skills - If you are above 25, consider using your SkillsFuture Credit to upskill yourself. This way you can juggle with more responsibility and seek faster promotions. If you are currently an NSFs, consider using your ePREP credit to upgrade yourself. Follow this link for more information

4) Budgeting and Tracking

Every month when you receive your salary, you should be planning how you are going to use the money. A general rule is 50-30-20. You should allocate 50% of your income to your needs and obligations. The remaining half should then be split into 20% savings/debt repayments and 30% remaining to do anything else you might want including investing.

This is just a general rule. I suggest that you come up with your own rules according to your circumstances and follow it.

Once you have budgeted your money, remember to track it. At the end of the month, you should review how you have done the previous month. Have you overspent on food? If that is the case should you cut down on the daily Starbucks drink you are buying before work? 

From this, you will be able to see if you are reaching your goals you have set in step 1.

Check out the top 3 budgeting app you should use here

5) Use a high-interest savings account

Lastly, instead of letting your money idle in your bank account that returns only 0.05% p.a. interest rate, consider switching to a high-interest savings account. There are many options out there. For adults, you can look at the DBS multiplier, UOB one, and OCBC 360 account. If you are a student, you can consider Standard Chartered JumpStart Account and CLIMB FastSaver.

There are also many alternatives to bank account popping up. This includes Singlife, Singtel Dash EasyEarn, and Elastiq. I personally have been using Singlife for its 2.5% p.a return.

Final Words

Saving money can be hard and requires lots of discipline. If you are struggling, consider starting small. Set mini-goals for you to reach. (Maybe reduce your expenses by $50?) 

Once you get the hang of it, slowly set larger goals for you to work towards too. 

Good luck!