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1. Research and set SMART goals
Gather information on what you need to spend on. If you’re saving for a trip, check out the cost of airfares, accommodation, meals, attractions and so on. Next, set SMART goals, says Vincent Tey, executive director of independent private wealth management firm Providend Limited. According to him, this means setting targets that are specific, measurable, achievable, realistic, and within a timeline. When estimating expenses, Vincent also advises adding 10 per cent to your total target amount as a buffer.
2. Budget, track and review
Create a detailed income and expenditure statement immediately, says Vincent.
Categorise your expenses into fixed and variable ones, and be diligent in recording and reviewing your finances. “Review your total expenditure pattern at the end of the month and make necessary adjustments to align it with your savings goal,” he says.
3. Cut back
Reduce your utilities bill by saving water and electricity, and eat at home more instead of dining out. You can even review your insurance plan to see if there is unnecessary coverage that you can cut, to save on your monthly premiums, says Vincent.
Sim Weiping, professional certified coach at Executive Coach International, suggests identifying what you can scale back on by creating a list of expenses, then crossing out three items at a time till there is nothing left. “The order in which you cross out the items would give you a sense of what you can cut back on.”
“Some expenses can be postponed while some cannot. For example, you cannot cut back on your monthly mortgage bills, but you can postpone buying a new pair of shoes,” says Weiping.
4. Substitute retail therapy with other activities
“Do you spend money on a whim or go on shopping sprees because you had a bad day?” asks Weiping. “When do you usually splurge the most on things that you don’t really need?” Be aware of the times when you spend unnecessarily and cut back on them. “Go for a jog instead or make someone’s day better. Do something else that makes you feel better instead of going for retail therapy.”
5. Reduce your credit card limit
While this may be inconvenient, it will help you to have discipline in your spending, says Weiping. Though you may not spend to the limit on your credit card, having that reduced credit limit will make you more mindful of what you spend on. “What’s also great is that it helps you to avoid those huge credit charges when you overspend,” she says.
Alternatively, Vincent suggests restricting the use of your credit card by leaving it at home during this period and using cash instead.
6. Open a dedicated bank account
Vincent suggests setting up a new account solely for your big-ticket purchase. “Limit your withdrawal options by not having an ATM card, transfer the amount you intend to save into this account on each payday, and transfer any remaining money you may have saved from your variable expenses at the end of the month,” says Vincent.
Weiping adds that you can also set up an auto-transfer. “An auto-debit in the bank account where you receive your salary is very useful. Most Internet banking services allow you to transfer money to another account on specified dates in the future. You can set up these transfers when you know you need to pay a big sum in the next few months. This will help you to control your spending,” says Weiping.
7. Create constant reminders
Make your savings plan known to your friends and family so they are not only mindful of your potential change in lifestyle but could also encourage you to save towards this purpose, says Vincent. He advises getting a close friend or family member who is a savvy saver to hold you accountable to your goal.
“Make your goal as visible as possible. (If you’re saving for a trip), paste pictures of the places you are travelling to in your office or at home. Read up and discuss your travel plans with your family, and so on. Keep the fire burning,” says Vincent.
8. Create small businesses
Weiping suggests cashing in on your talents. If you are an avid baker, organise a cake or pie sale. Or, try your hand at being a children’s party organiser. “It can contribute hundreds of dollars towards that big buy. Also, if you enjoy what you do, you’ll be happier at the same time. It’s a win-win situation,” says Weiping.
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9. Sell your old items
Go through your clutter to see if there’s anything you can sell, suggests Weiping.
“Do you have a cupboard full of clothes? Or a gadget that you bought on the spur of the moment and are not actively using?” asks Weiping. Rather than letting these items gather dust in a corner, she suggests putting them up on online shopping platforms such as Carousell and Gumtree Singapore.
10. Find the best deal
No matter what your big-ticket item is, look for the best possible deal. “If you are planning for a holiday, check out the limited-time sales that budget airlines offer. If you are looking for a new gadget, online shopping platforms often offer good deals for first-time customers,” says Weiping.