Finance 101: 3 tips to save more
11 May 2021
I distinctly remember what I felt when I saw my first full-time salary in my bank account.
"Omg...like that only ah..."
I was earning a typical graduate's pay at that time. After calculating a realistic monthly expenses budget, I realised that I could only save approximately $1000+ each month. It would take me the entire year to save just slightly above $10,000.
What I meant by a realistic budget was this: I was working at an office in Orchard then. There were no hawker centres, and food courts were few and far between. Sure, I could eat at a food court daily, order cai png or fishball noodles and save a ton. But eating that daily? That's quite a stretch.
Sometimes, my lunch buddies and I just wanted something different for a change. Is that too much to ask for? *grumbles*
That monotomous 9-to-5 life also meant that most office workers will need some entertainment through the work week. Shopping for new work outfits, streaming service subscriptions, a gym membership, weekend activities...the list goes on. Unless you have a difficult and urgent financial situation to deal with, I think that most of us would find it hard to get through the week without any entertainment at all.
I wondered how I was going to pay for big ticket items in the future, like a house, a family, or let's be real, medical expenses if my parents' ever needed it. The pressure was real - during work, to meet work expectations, and after work, to meet life expecations.
If you want to increase your foundation of savings faster, here are some tips on how you can do it.
#1 Create a budgeting rule (50/30/20)
Arguably the most popular budgeting rule is the 50/30/20 rule.
You can modify the rule to suit your needs. I can comfortably save about 40% of my earnings. The rule looks more like 40/20/40 for me.
The thing about budgeting rules is that it only works if you stick to it, duh. If you have trouble sticking to budgets, I recommend keeping track of your expenses using an app. I use Wallet, they have a mobile and web version which makes it really convenient to track your expenses even when you're on the go. There are paid features on the app, but the free one works just fine for me. I can set monthly budgets, create savings goals and track expenses from different bank accounts, which is detailed enough for my purposes.
There's no trick, no hack for this. Just record everything the moment you spend it and control your expenses if you've overspent for a few days.
#2 Know what to spend on
You know how to save, but do you know how to spend?
Honestly, this one takes a bit of trial and error. It's about knowing your lifestyle and what works for you, and nobody gets it right at the first try.
I used to spend on a monthly gym membership, which I only discovered a few hundred dollars later that it wasn't for me. Some other things I used to splurge on were things like weekend cafe runs and excessive grab rides. Of course, there are people who save excessively and sacrifice on some enjoyment. How much and what you choose to spend on lies on a spectrum.
That's why the word is relative. How and what to spend on is entirely up to you. That's why the hardest part about this all is comparison - feeling like you have to do what the next person is doing. But that's a conversation for another day.
For a start, be honest with yourself about what works and what doesn't work, and don't be afraid to cut things out when they emotional payoff doesn't match the financial expenses.
#3 Get on the side hustle bandwagon
One way to save more is to earn more. Enter the side hustle life.
Still not convinced by the side hustle life? Just think about the avalanche of uncertainty and change that is 2020. Now's the time to start diversifying your income streams.
But the side hustle life isn't all rosy. Side hustling means working more than your regular 9-to-5 hours. You must be prepared to sacrifice time for rest and socialising to do this.
Of course, you might think that you can get a cushy side hustle that pays decently well for a bit of work. However, my experience with side hustles is that it can be a hit or miss. It's hard to find something that balances out the money vs time equation. I really can't justify getting paid $10 for a 600 word article (yes, those are the rates you'll find in low entry writing jobs).
That doesn't mean it's impossible. I know of accounting colleagues who did some simple bookkeeping for small business owners, friends who are event photographers on the side. It takes a bit of creativity and a lot of hard work to distill from your existing skillset something that people need.
When you have 6 months of salary in savings, you're in the clear to begin investing - we will be sharing more about investing tips in future articles. In the meantime, happy saving!