In your eyes, it might seem like everyone’s pretty good at making decent financial decisions... but don’t be fooled! Most of us are probably spending beyond our supposed budget! This doesn’t only apply to big ticket items – even the smallest expenditure can add up to strengthen or sabotage your future.
So what does one do then? Well, here are 3 simple and practical tips that teach you how to save money, build up your financial confidence and hopefully, make better money decisions.
Tip #1 – Be Kiasu With Your Money
Yes, we are encouraging kiasu-ness in your financial decisions. You might be wondering: how will this ‘afraid-to-lose-out’ mentality help in making better money decisions? Well, for starters, being kiasu can score you good deals at a great value, hence stretching your budget. Got a gathering coming up? Start looking out for promotions and deals to share them with your friends to enjoy more for less!
This is also a skill that can help when reevaluating your daily expenses – some of which you are probably paying too much for. These are dollars and cents that can be shaved and saved, so start looking out for such spending.
Families who are kick-starting or in the midst of planning for the futures of their loved ones can also use this kiasu-ness to their advantage. For many, being kiasu also means preparing ahead of time. Plan your household expenses quarterly (or annually) on a simple spreadsheet or a tracker app. It’s a good way to track your expenditures and set targets for the future – allowing you to better prioritise what you spend on.
Tip #2 – Multiply, Add, Subtract
It’s exactly how it sounds, but easier. Yes, you read that right.
Use this simple method on a daily basis to better understand how your daily expenses are all adding up! Take the average cost of an item you splurge on frequently (or frivolously). For example, taxi rides to work every workday: S$20. Multiply that by 5 days (S$100), then 4 weeks (S$400).
Now continue this simple math on all other items. Here's an estimate for you to see the big picture:
A S$3.20 bubble tea thrice a week comes up to S$38.40 each month. A month of four weekend movies? S$50. A month of four restaurant meals? S$120. Add them all up and you’ll reach an estimated amount of S$608.40 in just one month.
If this figure hits home to what you’re spending on a monthly basis (or perhaps, even more), it’s time to rethink and start subtracting some of those indulgences. More often than not, the need for better financial discipline only arises when we find ourselves short on money – creating a vicious cycle which can only be stopped, when one becomes much more financially resilient.
Tip #3 – Question Your Purchases
Did you know that 1 in 2 millennials have started saving for the future, ahead of other generations like the baby boomers and Gen X? Yet, millennials are the ones who are most likely to splurge their savings.
It can be hard to not be tempted when sales, promo codes and highly-curated lifestyles follow you everywhere, online and even offline. So if you ever find yourself uncertain or unconvinced of any purchase, here are 3 questions you should always ask yourself first:
“Can I Really Afford It?” Will this purchase land you in debt? If the answer is 'yes', put it on hold. Because good and bad debts are still debts. Should your answer to a case of debt be ‘no’, be sure to double check that the money spent on this item won’t detract from something else you actually need.
“What Will I Do With It?” Will this purchase help you forward a specific goal? For instance, investing in a professional microphone for your side hustle? Or will using it contribute to the quality of your life? Like a memory foam mattress for a good night’s sleep?
Thinking about your plans for the item and all its realistic uses will further assist your decision in whether or not to purchase it.
“How Often Will I Use It?” Is this item needed just once or twice? Or is it something you’ll use daily? Buying something for a one-time usage isn’t always necessary. For instance, if you’re going diving for the first-time. It’s probably best to rent the equipment rather than burst your budget on a full, personal set.
Unless it’s an item you’d need on a daily basis for work, like a laptop – or for your personal hobby, like swim goggles for your routine – try exploring other creative ways to get your hands on the item! Borrow from a colleague, search on second-hand forums or visit thrift shops. Take the time to reconsider all your options before buying something, because you might just find that you don’t need it after all.
Practice Makes Perfect
Making the right financial decisions takes time and is easier said than done. The question of how to save money is often about real-life practice and experience with managing (or mis-managing) your money.
At least now you know – that spending less does not necessarily compromise on your quality of life. In fact, it could end up giving you back more in the long term.
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