Tried And Tested Tips to Achieve Financial Security

Key Takeaways

• 1. Save before you spend by putting money into a savings account as soon as you receive your paycheque.
• 2. Always track your budget and expenses so you know what you are spending and what you can cut back on if needed.
• 3. Put your money in a high-interest savings account to keep it safe and secure while earning enough interest to combat inflation.

Saving to achieve your long-term financial goals

Planning for your financial future starts with one important goal – growing your savings. But with the rising cost of living and inflation in Singapore, it can be a challenge. By following these proven tips and strategies, you can learn how to start saving money to achieve financial freedom.

Always pay yourself first

Warren Buffet once said, “Do not save what is left after spending, but spend what is left after saving.” In other words, always pay yourself upon receiving your salary. With what is left over, you can put it towards commitments like loans and monthly bills, followed by daily expenses and the occasional treat.

One of the easiest ways to do this is to set up an automatic transfer from the salary crediting account to another savings account after your paycheque is credited. This also makes it easier to distinguish between what is savings and what is for bills and other purchases. Otherwise, you may overspend on your budgeted personal allowance.

How much should you save each month?

Everyone has different savings goals and targets based on their salary, needs, and wants. One of the most common is the 50/30/20 rule:

Based on the 50/30/20 rule, 20% of your monthly salary would go towards savings. However, this is just one way of determining the amount of money you should save each month. You can also save with a particular goal or objective in mind.

For example, let us say that you are a working professional making $5,000 a month, and you follow the 50/30/20 rule. $2,500 would go towards needs (50%), $1,500 on wants (30%), and $1,000 on savings (20%).

Perhaps you are looking to send your child to enrichment classes next year. From the quote obtained, this will cost about $6,000 a year. To maintain your current level of savings, you may have to cut down on wants by $500 a month for 12 months to save an additional $6,000.

Don’t deprive yourself of comfort

Saving money each month is good, but you should be careful not to go overboard by eliminating wants from your budget. This can be counter-productive over time and lead to revenge spending.

Factoring in a sensible monthly spending limit for wants in your budget is the easiest way to prevent revenge spending. By making room in your budget for dining out, hobbies, or shopping, you can sustain your momentum toward building up a larger savings account.

Another healthy way to reward yourself is to create a milestone and timeline for a purchase you want. Then determine how much you need to save for it over a certain period. Once you know how much more you need to save during that period, you can adjust your budget and savings plans accordingly.

Track your budget and expenses

One of the biggest obstacles to saving up is not knowing what you are spending each month. The Citi Mobile^® App, for example, has features to help you save and manage your money:

• The Citi Wealth Analysis dashboard allows you to view, manage and access insights on your wealth portfolio
• Be notified of the latest transactions via push notifications
• Transfer funds or make payments on the go
• Manage your bank and credit card statements

You can also try keeping a money journal to track your spending habits – as well as your thoughts and feelings about these financial decisions. By keeping a money journal, you may end up embracing the virtue of saving even more by being at peace with what you are cutting back on.

Put your money in a high-interest savings account

As inflation causes the value of money to change over time, purchasing power erodes. A cup of coffee which cost S$1.50 last year, may cost S$1.60 a year later, for example. Although the increase illustrated is marginal, the cumulative effect incurred from daily expenses can take a toll. This is especially if salaries remain stagnant.

One of the simple ways to protect your savings against inflation is to deposit them in a high-interest account. This is an essential complement to your other financial strategies, such as investing and insurance. However, high-interest-rate accounts typically have corresponding tenure or lock-in period.

The terms of this lock-in could vary highly. It could mean you cannot withdraw your money during this period, or if you withdraw it, you will earn no interest or incur a penalty. The longer the tenure, the more attractive the interest rate will be. Such high-interest-rate accounts are not entirely riskless either, and they have a chance of defaulting. You should research extensively and consult a financial advisor to learn more.

Maximise your savings with Fixed Deposit

Another option to grow your savings is with a fixed deposit account.

The Citi SGD Time Deposit account may be just what you need to do that – earning up to 3.88% per annum (Terms and Conditions Apply).

Apply now to see how you can boost your savings.

Disclaimers

Deposit Insurance Scheme

Singapore dollar deposits of non-bank depositors are insured by the Singapore Deposit Insurance Corporation, for up to S$100,000 in aggregate per depositor per Scheme member by law. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured. For more information please refer to SDIC's website at www.sdic.org.sg.

An administrative fee or withdrawal charge may be imposed for termination of time deposits prior to maturity date. No pre-termination of the time deposit is allowed for CNH and ZAR

This article is for general information only and is not intended to be a forecast of future events nor a guarantee of future results and should not be relied upon as financial advice. All views and opinions are as of the date hereof, and are subject to change based on market and other conditions without notice. The article has no regard to the specific objectives, financial situation and particular needs of any specific person. It is neither an offer nor a solicitation to purchase, nor endorsement or recommendation of any products or services mentioned therein, and the products or services mentioned may or may not be offered by Citibank Singapore Limited, its related entities and their respective directors, agents and employees (together "Citigroup").

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