5 Avoidable Mistakes Singaporeans Make When Trying To Save Money

There's a stating that goes such as this, “save your money today and it'll help you save tomorrow”. It may sound easy right? Just two easy steps: 1) Put money somewhere, as an account, 2) Repeat Step one. While simple theoretically, saving effectively is monumentally hard. Much more when there are plenty of things to pay for, like bills, leisure, travel, etc. In the following paragraphs, fundMyLife shares avoidable mistakes when saving cash, and just how you can prevent them.

# 1 Not Having An objective And Plan

One of the most common mistakes when saving money is you do it with no goal and a plan. It's think about realize that you must save, but it's another to be aware what you are saving for.

The goal is a destination, whereas the plan will help you make it happen. For example, you'll need a car which costs $100,000 in 10 years. We all know it's not that cheap, but bear with us. Not counting inflation, you will need to save $10,000/year, and $833.33/month. Simply put, the goal gets the car, getting it there by saving $833.33 is your plan. By the way, to illustration's sake – typically you'd take a loan for your car anyways.

Without a goal to operate towards to, you'll eventually question why you're saving in the first place. Without that motivation, it's easy to fritter away those funds. Saving towards retirement is a good goal, out of the box saving towards a possession that you wish to have. The main thing would be to have a goal to operate towards to, and a intend to help you to get there.

As Friedrich Nietzche would say, “he who has a why to live can bear just about any how”.

# 2 Lacking The Discipline To Save

Now that you've a goal to operate towards to, it's time to put it into action. If you don't summon the discipline to start, you will never get anywhere regardless of the better of plans. Additionally, if you do not summon the discipline to regularly save after starting, it is difficult to maintain it on the long time.

Make it a routine in order to save regularly. Habits can be a powerful thing – as the saying goes, “we first make our habits, after which our habits make us.

# 3 Not Tracking Expenditure

Tangential, but essential. To have enough in order to save each month, you'd have to be aware of what you're spending on. Imagine, in case your spending is uncontrolled, you would be not able to have enough at the end for savings.

There are apps open to assist you to track your expenses so that you have enough for savings. We recommend the Seedly app – it's been around for a while, together with strong community support online online.

# 4 Spending As Soon As You See A Pile Of Money

After some time, you'll soon visit a pool of cash in your account. Delighted, you think it's okay simply to take some bit for many expenditure. Say, a holiday in treat yourself for that good job accumulating your hard earned money. While we advocate living life well, being able to take a little means you're also able to take a lot from the account. Soon, you might find yourself in where you started.

There are two ways people save generally. Firstly, spend first then save. Secondly, save first then spend. The previous enables you to get the expenses settled, whereas the second way enables you to meet your saving goals first. To avoid finding yourself in where you started, it doesn't matter how your save, be sure you split your money further into different pots. Rather than two pots, i.e. expenses and savings, you can split your savings category further into travel, retirement, etc. That way, you retain your savings pots separate and do not risk overspending.

When you're terrible at saving money, it's time to consider savings plan, or an endowment. The tenure duration of an endowment fund means you won't be able to touch any of the money that you simply put. However, you need to not secure All of your money in there, lest you'll need the cash for unforeseen emergencies in the future. This involves the help of a great financial adviser.

Alternatively, you can consider a fixed deposit – the fixed deposit usually has a decent interest rate, depending you choose to lock up your money. Additionally, the account penalizes you for prematurely using the money out by taking out the interest rate. This forces you to think long and hard before withdrawing from your fixed deposit.

# 5 Forgetting That Inflation Exists

Last although not least of the numerous mistakes when saving money, people often forget that inflation exists. Actually, it is among the deadliest mistakes when saving cash. At best, if the rate of interest of your checking account is equivalent to the inflation rate, you're just maintaining and not growing your money. However, if you happen to pick a low interest rate checking account, the actual value of your money will decrease with time. Imagine saving money that decreases in value with time due to the improvement in rate of interest and inflation.

To avoid this, you will need to save additional money just to adjust for inflation. Alternatively, you'll have no choice but to take a position some of your money in order that it grows.

Connect with fundMyLife financial advisers today!

Hopefully, you're more knowledgeable about the most common mistakes when saving cash. A lot of these problems can be avoided for those who have a good financial adviser. He/she can serve as a sounding board along with a friend while you travel in your journey to achieve sound finances.

Haven't found a good financial adviser? Worry not – fundMyLife has your back. You can interact with our panel of experienced and awesome financial advisers, curated by us. If you wish to engage more financial advisers, or you haven't found the correct one, have you considered advisers of fundMyLife? You are able to visit fundMyLife and ask our awesome financial advisers questions. Alternatively, you should check out our curated pool of individual advisers and get them questions directly.

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