If there is anything that 2020 and 2021 have taught us, it is that no matter how seamless, enjoyable, or satisfying your life is – anything can happen. When COVID-19 struck in March 2020, it left trails of destruction, death, and confusion in people’s lives because of loss or reduction of income.
In Singapore alone, millions of people have been affected directly or indirectly. One of the best ways of preparing for the unexpected is to develop good saving habits, but how do you do this?
The cost of living might be growing faster than your income, but making some savings is very important. Do not let challenging times in life ambush and knock you down or throw your life off-balance – use the following strategies to save money properly in Singapore.
Start With a Simple Budget – Consider Adopting the 50/30/20 Budget Model
We must indicate that it can be pretty hard to achieve significant savings without good budgeting. One of the best and perhaps the easiest models to use when starting your saving journey is the 50/30/20 strategy – call it the smart way for managing money. Under this rule, 50% of the income is allocated to personal necessities, 30% to cater for personal wants, and 20% channeled to savings.
When we mention the terms “necessities” and “wants,” one might get confused because the definition tends to overlap. Necessities are basics without which a person’s life is bound to become very challenging. They are things such as shelter, food, and clothing. When it comes to “wants,” they are things that a person does not just need, but also desires.
As your savings grow, it will be a bad idea to let the money pile where it is not generating something in return. So, consider putting the savings in high-return accounts. You might also consider assets that are easy to liquidate when money is needed urgently.
Make Every Dollar in Your Revenue Count
If you are a beginner, this is another method that has worked wonders for Singaporeans. The goal is to ensure that your entire revenue is assigned to specific areas and nothing is left for impulse buying.
To do this, you need to start by identifying your purchasing categories and then assign some cash to each of them. Do not stress yourself if it is impossible to categorise all the areas of spending because the budget can be readjusted regularly, preferably every month. Note that saving should be one of the spending categories. To make saving money through this strategy easy, here is a demonstration.
Step One: Income (say something such as 5,000).
Step two: Find categories and allocate all the 5,000. Here is an example:
- Transport - 500
- Food - 1000
- Education - 750
- Entertainment - 500
- Wants -1000
- Saving - 500
- Debts -500
- Education - 250
Step Three: Make sure only to spend money that you have (live within your means)
- In the event that you overspend in any of the categories, adjust the others to strike a balance. However, the changes should not be in your savings.
- If you have a new category, it is okay to add it, but make sure to adjust others to cater for the additions.
With this strategy, you are able to live within your means, grow savings, pay debts, and most importantly, avoid sinking further into debts.
Adopt a Strategy to Clear Debts
Saving money and paying debts are critical financial goals, but they can be tough to achieve when the income is limited. To make it easy for you to get out of debt and grow your savings, you need a clear strategy, and we are going to tell you one of the best.
- Reduce spending on unnecessary costs and direct the funds to pay debts and grow savings. For example, you can reduce spending on new pricey clothing to get additional funds to build a saving account.
- Start by clearing the debts with high-interest rates because they can easily pull you deeper into debts. For example, you might want to prioritise clearing credit card loans before shifting focus to unsecured debts.
- If the debts are many and following with timely payment is challenging, consider debt consolidation. This involves rolling several debts into a low-interest rate loan, which is easier to manage.
NOTE: If you have to borrow money, the rule of the thumb is to only go for the amount that you can comfortably repay. Consider working with loan comparison sites, such as Lendela to identify financial institutions in Singapore with low-interest loans.
Automate Your Savings
For most people in Singapore, life can get pretty busy, making it challenging to follow on some of the things such as deducting and making savings. Think of a family person who has multiple responsibilities both at home and workplace. Because there are no penalties for remitting money to your savings account, there is a risk of forgetting.
For others, falling into the temptation of impulse buying when checking merchandise online or walking downtown is easy. When the resources start falling low, they reduce or cancel savings for that month. The good news is that there is a way out – automating savings. To do this, you only need to create a savings account and have a section of your monthly income going directly into it.
To avoid going for the savings, you might even consider limiting the number of times to withdraw from the savings account and delink it from your ATM. See – you are ensuring that money for savings is deducted first and making it harder to go for it. With these considerations, you increase the chances of growing personal savings.
Develop a New Revenue Stream
Well, it is apparent that the more money you get, the more the chances of saving. A part-time job allows you to engage in another income-generating activity apart from your primary job. For example, if you are a teacher in Singapore, an evening part-time job can act as an additional stream of revenue.
Part or all of the money you generate through a part-time job can be directed to your savings. You might also want to do it the other way round – using the money from side hustle to meet your expenses and salary from the primary job for savings. The choice is yours.
When selecting a part-time job, it is advisable to go for something that you love. This is important to avoid getting bored midway and dropping off. For example, if you really love teaching mathematics, working as a part-time tutor can be pretty enjoyable. Some of the top part-time jobs that you can consider in Singapore include:
- Run a blog: This can be a very rewarding part-time venture, but you need to appreciate that it might take some time before you can monetise it.
- Work as a part-time interpreter: If you are bilingual, it might be possible to work from home as an interpreter and get some extra cash. Most of the jobs involve translating either written or oral texts from one language to another.
- App development: If you are an expert in programming, there are many companies across the globe looking for experts to help them with apps development. The good thing is that most of these projects allow people to select preferred working time, implying that you can opt to work during free time.
If You Must Borrow, Only Go to Loan Providers with Low-Interest Rates
While it is true that you should try to avoid borrowing as much as possible when trying to grow savings, it can still be okay when managed well. For example, it might be a good idea to go for a personal loan in Singapore to pay for education or consolidate current debts instead of emptying the entire savings accounts. The main advantage of using a personal loan in Singapore is that you are able to access cash and pay in instalments. This means a number of things, which are critical to your saving plan:
- You get the cash needed to meet your major expense.
- The cash is paid in instalments, implying that you might be able to repay without altering the saving and emergency allocations per month.
- Because personal loans are unsecured, there is no risk of your personal assets getting sold in the event that you are unable to repay.
If you want a personal loan or other types of unsecured credit in Singapore to work in your favour, consider only the low-interest options. However, identifying a loan with low-interest rates can be challenging because there are many loan providers in Singapore. This is why you should work with loan comparison sites, such as Lendela.
Lendela helps to make the process of identifying the best bank or financial institution simple and convenient. You only need to visit their site to make a short application (it takes only a few minutes), get offers from loan providers, pick the preferred option, and sign off the loan. It is as simple as that! Then, stick to the repayment plan.
As we have demonstrated in this post, one of the most essential things in life is saving money. The savings can provide cushioning during tough times, preventing you from problems such as sinking into debts and depression. Use the strategies we have highlighted in this post to make saving money fun and enjoyable.
The Importance of Your Credit Reputation in Singapore
Did you know that your credit reputation, which includes personal credit payment history, is available on record, and it impacts how financial organisations regard you as a borrower? We know that this might sound scary, but it is a fact, and a bank might decline your application for a loan because of poor credit history. Simply put – having a good credit reputation is very important for sound financial management, but how do you achieve it?
This post digs deeper into credit reputation to help you understand why it is so important for Singaporeans. Keep reading because we will also list some proven tips that you can use to improve credit reputation and walk to financial freedom.
What is a Credit Reputation?
Before we can demonstrate why credit reputation in Singapore is so important, it is crucial to start by understanding what it is. Credit reputation is a report on the status of your financial health. At times, you might get it referred to as a credit score. In Singapore, it is presented in a 4-digit number, ranging from 1000 to 2000. The score is used to represent creditworthiness, with 1000 being the poorest and 2000 the best.
To find out about your credit reputation, you need to work with the Credit Bureau Singapore (CBS), the organisation mandated with calculating Singaporeans’ credit scores. What CBS does is pooling the information about your finances from different parties, such as banks and utility organisations, to determine your creditworthiness. If you own a credit card or were declared bankrupt a few years ago, CBS will also get a report about it too.
Credit Reputation Calculations in Singapore
CBS uses advanced algorithms that help to calculate the score for all Singaporeans. So, here are the main components that are factored in to determine your reputation:
- Credit Utilisation Pattern: This is the total amount of credit that a person uses.
- Recent credit: If you apply for multiple credit cards over a very short period, it will affect the overall score negatively.
- Late payments: If you do not repay credit on time, it can greatly damage your reputation.
- Credit account history: A person with a long credit history will get a better reputation compared to new applicants.
- Available: This refers to the number of accounts you have, from credit lines to bank accounts.
- Inquiry activities: Making too many inquiries is likely to show you are desperate and harm your reputation.