Asked by Anonymous
Asked on 29 Aug 2018
I am keen to save up for a future. Before I start investing and learning about all those, I am thinking to have the better financial habits first as I graduate soon. Any tips would really be appreciated.
Kudos to you! Indeed cultivating the right financial habits is more important than knowing everything else but not practising it. Here's some words I wish I knew when I was younger.
1. Stay out of debts - and make it that way.
There are good debts and bad debts but any debts includes a compounding interest and we all know how those interest vs saving accounts or investment (which is a variable) measures up. If you have to grab 2 meals at the hawker vs a big expensive meal for a birthday celebration; do it. Do not have the mindset that my pay will cover that because before long you will realize opps, I can't pay it off and these interests compounds. If you had to buy a new handset and do not have the money; borrow a old one.. or if you had to skip gatherings because they are aplenty in your 20's and bloody expensive(or the fact is many of your friends have parents who are still financing them but maybe not you) and if anyone raise hell/peer pressure because you're not joining because it's too frequent and expensive.. ignore them. They won't be here forever but your debt stays with you. True friends will understand.
2. MYOB (effectively Mind Your Own Business)
I used to do the niceties of buying gifts for people during their birthdays, festive seasons and I truly believe in sharing the joy. All it does is put a dent on my pocket and well you'll be able to socialize a little that way, in the long run you wouldn't be socializing for the sake of doing so. So I started skipping these niceties because for those who appreciates and try to reciprocates; they don't have to now.
I notice these little acts of giving also gives me the excuse to buy and since I stopped doing so (except for close friends and Christmas - the only time ever and I shrinked my budget very much); I actually saved quite a bit of money to go into donation.
At work, we even had people with white envelope going around collecting pek kim for a not-so-close-colleague. Every donation was $50 minimum and it's not even for the immediate spouse... it's for the father-in-law and even crazier; grandfather. Honestly, I feel for them and condolences but they're richer than I am and nope, I'm not financing every father in law or grandparents death. I'll say a little prayer for the lost soul. (In the past I'd have donated it to not look awkward but honestly speaking.. who cares?)
3. Do your due dilligence (and do not trust anyone with an incentive simply.)
I know it's getting depressing here but hear me out. I started work early and was attracted by the "extra-cash-during-emergency" idea offered by the banks. When one of them approached me at bedok mrt I was like okay~ it's only one card and I won't use it. Nope, you would. And you might think you'd always have the money to pay it off next month which doesn't happen because the cycle repeats itself.
Whoever sold that idea ought to be shot but if I had done more thinking and research myself; I'd have noticed that the interest rates were exorbitantly high vs other banks.. and that idea about emergency cash comes with hidden clauses.
Same for insurances.. know what you want to buy and not buy then get to know what you bought. There are many agents who will do anything to get the commission and they don't care about you. Even if the agent was recommended by people you know; CSI them.
On investments, I have been trying to learn about investing lately and some friends out of seedly has been trying to introduce.. what they are investing in. It's all good for learning and discussing but goading to buy isn't. I refuse to follow and thankfully I didn't because the shares started falling as soon as they bought. Same thing with cryptocurrency.. just check out the results.
4. Know your area of potential improvements/strength & weaknesses.
I followed an online advice and in the excel spreadsheet I recorded the following:
On a monthly basis I get an idea of what I could cut and do to improve my finances. While I have successfully cut down on Starbucks - I have yet to successfully cut Grab.. although I managed to get a hack to reduce the spendings heh and I try not to use it on weekends when it is more expensive.) In the mean time I also managed to cut down on cable, reduced HP bill by half going for SIM only.
I also learned that I am the kind who would spend $ if I see the amount inf my account so I need to give myself panick attacks by giro-ing my funds off to a saving account on monthly basis haha.
5. Buy smart.
TBH I'm quite lazy and usually just go for "the acceptable range"before placing the order. Now I buy and gets calculative because using the shopback app you save from shopping online (if you're unable to quit might as well do it well~). I also get cashback from using my standard chartered unlimited cashback card (I used to do alot of rewards but I don't ever rememeber to utilize the points).
I usually get a plesasant surprise by end of month knowing how much I've saved from these apps/hacks since most of the stuffs are necessities anyway. Also, buy things off-seasons. Buy your winter clothings when it's summer and hot AF. Buy the old iPhone when new ones are coming out (because the prices drop like `-_ ) and your new iphones are still new and totally functional.. at fraction of the original price jacked up due to the brand.
6. Know your objectives and even if you don't know what you're saving for; do it anyway. Then invest it (you must know your priorities).
7. Earn a second income or have plans to do so.
It could be learning to invest or be a tuition teacher whatsoever... just have something in case the first one fails. Especially if you are married - and have kids or dependents.
8. Plan retirement early.
Compound interests works wonder but you need to look at the calculator to be convinced. Start topping up your SA, donate via give.sg to a charity of your choice and earn some tax relief in the mean time. Start small and this will compound into a big sum in future.
Hope these helps!
Hey! this is a pet topic of mine, so I will quote some of the best advice I've recieved and also given out here:
I will leave the 'making money' one out as I believe that in 20-30 years old, you should be focusing on deepening your skillsets by working hard and grinding it out (in your normal day job). So these 7 things are more like hacks and really lesser known things amongst Singaporeans.
1) Chosing the right savings and bank account
This is a big one. Many people enter the working world using the typical POSB kids savings… However, you probably really need to know that there are accounts like OCBC360, UOBONE and BOC SmartSaver that actually are designed for you. Most would recommend this calculator for you to figure it out on your own: https://seedly.sg/tools/savings-account-calculator
2) Segregating your savings and spendings account so you don't overspend
A classic savvy move, where you limit your spending into two buckets. And always credit to your savings account and pay yourself outside of that amount into your spending account and spend from that account. Again, this is in addition to the above method but in this example combination: OCBC360 (savings) + DBS Debit Account/Card (spending) for fresh graduates. If you can put aside at least 30% of your take-home pay to savings, it can grow on its own over time to over $20k in 2 years. You can check out more at this article here: https://blog.seedly.sg/working-adults-allocate-your-monthly-salary/
3) Switching to SIM ONLY plans and not buying 1st hand phones
This is a trend that is happening with the #telcowars. One of the biggest discussion topics in our community, many savvy Singaporeans are all switching over to SIM ONLY to save over $30 to $40 month which also allows the flexibility a shorter or no contract. The only downside is that you do not get any subsidies on new phone sets. For a typical user who needs around 5GB, check out the Singtel SIM ONLY or if you are looking at 28GB, you can consider the Circles.Life plan.
4) Figuring out your CPF accounts early (topping up SA - special account)
This is something that many Singaporean working people discuss over lunch. Should you actually top it up? There is a big positive to this, that you are guaranteed 4-5% p.a that will compound all the way till 55 years old and beyond. However, you can only withdraw that sum only then. If you decide to top up using cash, you can actually get tax deducted up to $7k worth of contributions as well. Highly recommended If you have excess cash or OA (ordinary account) and are not looking to invest it on your own, this is a viable option for you to place in and let it compound.
5) Using cashback sites when shopping online
This is a classic example of a smarter savvy way to make purchases. By stacking not only cashback credit cards, but also using sites like ShopBack to get that additional 1 to 5% cashback on every single transaction you make. Example is Shopback. this is only the tip of the iceberg haha.
6) Buying Term life instead of whole life insurance
Another heavily debated concept but better appreciated amongst the savvier community. Simply by buying term life, it frees up cash flow especially for the younger crowd and not have to pay huge premium sums. By investing or using the amount saved to do other things to value add.
7) By being here in a savvy community on Seedly!
Everyday, new things come up, where else in Singapore can you find a genuine and unbiased community helping each other find and discover the best products? We designed the community to be a ground-up initiative of knowledge sharing and helping each other get better not only for saving but also investing your spare capital. :)
Not only cost savings but save the earth 🌏!
1) Work in a $4.50/$5 per hour F&B job. You will learn to serve and you’ll appreciate money a lot more.
2) You’ll start looking at things you wanna buy in hours. Suddenly that $10 Starbucks coffee looks like 2hours of your work. Is it worth it?
3) Before you buy something (that you want), take sometime to consider. For example if it’s a bag that you wanna buy, look at it first then come back 2,3 months later and see if you still want it. Impulse buying is extremely dangerous.... for your bank account. 😂
So many has shared great tips. Just my two cents :
Ensure your expense is much lower than your income. Cultivate the habit of saving up. Have financial discipline, e.g. Paying your credit card bills in full on time. Cc is great with cashback feature, provided you always pay in full on time.
Giro is your friend. Try to set the hoops your savings account need you to jump through on automatic as far as possible so for all intents and purposes your spending account is your "only account".
Credit cards can be too tempting for someone new to having a full time income so you may want to ignore that portion of "bonus interest" but if you truly think you are ready for one, you can request they set the card limit to your monthly budget - just because they are willing to offer you 4 months salary doesn't mean you have to take it. Again, GIRO your cc bills.
Some like to claim they want to do electronic payment in case there are unknown charges etc - practically speaking, you will get further talking to/writing in to the bank with charges paid than trying to hold them to ransom insisting you refuse to pay the last month's bill unless they waive charges or whatever.
Create a spreadsheet and calculate your personal net worth.
This can be your savings in bank accounts, investments, things that you can sell off (eg. Carousell), cash value of insurance. Some even consider CPF. Subtract that with your liabilities if any: existing loans or unpaid payments. Hopefully your calculated net worth turns out positive. From there, you can have a broader idea of what you can monetise and also decide how much to allocate to investments.
Tracking your expenses is important too. Know what you can reduce spending on. No blame no shame. List everything. You can use the Seedly app (it's free!)
Set goals. There are stages in life that require huge sum of money. Travel expenses? Further studies? Marriage? New house? Babies? Cars? Medical bills? Postmortem expenses? Ask yourself what you want in life. When do you think is a good time to retire?
Read up on CPF, IRAS, HDB, all the gov websites. Familiarise yourself with the possible tax reliefs. Know what you can or cannot do with your CPF.
Well, there's no such thing as easy money. The faster the money comes in, the faster the money goes out. You can first of start by changing your lifestyle; less Starbucks, less clubbing, etc. This can help you get a sum for your investments later on.
I would just say don't throw birthday parties and cut down on celebrations. If you cannot bear to stop hosting your birthday parties, then be more conservative with the spending (even if your parents pay for them!). Also cut down on other celebrations such as couple monthsaries (if he/she is not okay with that then maybe you could look for someone more mature). Saves at least a hundred every year.
If you are looking for a life partner (man or woman), keep in mind that a thrifty one will help you save money all your life.
If you play games, avoid the free to play games if you know you'll even spend at all. One dollar leads to another and these games are very good at making money off you, especially japanese gacha games that are essentially gambling games.
Keep spending like you're on budget too and dont ever bother trying to look rich to impress anyone but clients.
Just my personal opinions to add on to the other tips posted here.
Stick to sim only plans and buy your own phone.
Don't chase after the newest flashiest phone like iPhone X or Samsung 9. Stick to phones which meet your functionality
Buy term and health insurance for coverage
Not cost savings but save the earth