Preparing to spend a bomb on your home renovation? These tips might help you fund it!
1. Automate Your Savings
Have your bank automatically deduct a portion of your paycheque, and send it to a different account. When you don’t have to think about it, it’s much easier to save.
2. Make Your Savings Account and Money Inaccessible
Lock away the ATM card for your savings account, or cut up the card. When you want to spend, it will take you at least a day to get a replacement. This will cool impulsive buys. Can’t resist spending your money, even when it’s in a savings account? Try converting it to US dollars. This will make it super inconvenient to spend, and the thought of paying for the currency exchange will likely dissuade you from using it.
3. Compare Potential Losses
Tempted to buy something? Okay, think of a favourite item that costs less (e.g. music lessons for S$60 a session, or S$10 for your favourite overpriced nasi lemak).
Now if you want to buy a S$900 tablet, ask yourself: would you rather have that tablet or almost four months of music lessons? How about the tablet or 90 delicious, indulgent lunches? This should ease the temptation somewhat.
4. Use Credit Cards as a Mode of Payment, but Not for Credit
Use your credit cards to buy things, and then reap rewards and discounts. Then pay it back in full immediately, so there’s no interest rate to worry about. You get all of the advantages, none of the drawbacks.
5. Save Even While Repaying Your Debts
Never throw all your money at debt repayments. You must still save a bit, even as you pay down your debt. This is because an emergency, if you have no savings, can force you into using credit again (thus undoing your repayment efforts and keeping you poor).
6. Don’t Bulk Buy When You Don’t Have To
You do save money by buying in bulk, but not if it’s something you don’t even need. If you have no use for grapefruit concentrate, don’t buy any just because it’s a two-for-one deal.
7. Plan Your Groceries for a Week
If you find you are overspending on groceries, and you often plan for a month, try reducing the time frame involved. Some people tend to greatly overestimate how much they will need on long time frames, such as a month. So try buying on a per week basis instead.
8. Don’t Save Your Credit Card Info While Shopping Online
When you can “buy with a click”, you are far more likely to make impulse purchases. All those “just a dollar” apps or in-game purchases can add up to several hundred dollars a month, once the addiction kicks in. If you have to manually enter your credit card information each time however, you’re less likely to spend. Also, this helps protect you from identity theft.
9. Have a Project at Home
Have some kind of extended project at home, such as building your own herb garden, knitting a sweater, finishing War & Peace, etc. When you’re excited to go home and tend to your project, you’re less likely to go shopping after work.
10. Be Open to Refinancing Your Home Loan
Home loan packages change all the time, and most of them jump sharply on the fourth year. If you have a private bank loan for your house, contact a mortgage specialist and start looking for a better loan package every four years or so. You may not find one (in which case keep your current package), but you can save thousands a dollars a year by keeping to the cheapest home loans.
11. Got a Joint Account? Set a S$100 Rule
Establish a rule that, for purchases of S$100 or more, you must speak with the other joint account holder before drawing the cash. Their job–along with yours–is always to act as the devil’s advocate, arguing why the expense is not needed. This is a good way to dissuade impulsive buys.
12. Pay Down Your Loans in the Right Sequence
Pay off your loans from highest interest to lowest. This is usually credit cards first, personal loans second, and all other loans third. This will minimise the impact of interest rates.
13. Get Some Exercise
Get off the bus or train one stop earlier, or get your cab to stop just a walkable distance from your destination. The walking will be good exercise, and over time you can save quite a significant amount on transport.
14. Share Your Savings Goals
Declare your savings goals to someone you meet or speak to often. Just like dieting, it helps to get someone else to enforce your behaviour. Also, you are more likely to follow through on a commitment when you have declared it aloud.
15. Make Sure Your Savings Goals are Specific
There’s no point aiming to just “save some money”. That’s too vague. Instead, aim to save a specific amount by a given point. This can be S$300 a month, or S$50,000 in a year. If you set savings goals for the long term, you can compensate your monthly savings to make up for the times when you fall short.
16. Make Your Savings Goals Visible
Stick your savings goals somewhere you’ll see them every day. Your computer desktop is a good choice, as is your phone’s wallpaper. The more often you’re reminded of it, the less likely you are to slip and make an impulse buy.
17. Check Your Employer- or Career-Related Associations for Discounts
It’s quite common for vendors to give discounts to a whole company or association. For example, some childcare services give a discount to everyone in a law society, or to every employee of companies in a banking association. These can be a good source of discounts, which most people forget to check.
18. Compare Insurance Policies Before Buying
Don’t give in to the first insurance salesman you meet just to get rid of him. There are numerous places where you can compare insurance quotes online – try to find the ones that charge the lowest premiums, and which have the lowest Effect of Deduction.
19. Clear Your Cache When Shopping for Cheap Flights and Hotels
Some websites, upon seeing you return repeatedly, will raise the prices. This is because they know you are almost certainly going to buy, as you keep coming back to the page. Just clear your cache before returning.
20. Rent a Car, Don’t Buy One
The down payment on a car in Singapore (usually around S$60,000) is better invested elsewhere. A car is a depreciating asset, so all the money you spend on it will ultimately be lost. It makes more sense to rent a car if you absolutely need one.
21. Establish Gift Rules in the Family
Cap the value of gifts (S$20 is a good number) between family members. This ensures that you won’t have to feel bad when you give your wife new socks, and she buys you an iPad or something. That kind of thing often leads to gift escalation, where the prices go up until everyone is poor.
22. Aim to Eliminate Two to Three Main Expenses Every Month
Identify three things that you often spend on (e.g. food, travel, and clothes), and aim to reduce the expenses on each one by 10%. This is much more effective than the “spreadsheet” method, where you try and follow a planned list of expenses. Also, if you fail in one you will probably succeed in the other two, which should keep your morale up.
23. Learn to Sell Instead of Trash Things
Get used to E-Baying used items or letting them go on Carousell. This will allow you to minimise the cost of purchases, by letting you get some money back from them afterward. Besides, it’s a great way to find cheap buys as well.
This article was first published on SingSaver.com.sg, a financial comparison site that provides tips and advice on saving money in Singapore.
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