Monday, March 8, 2010

Money Saving Tips

Source: Voices Special Edition 2008. Your Survival Guide. Central Singapore Community Development Council.

Some tips on how we can effectively manage your money. Those in blue italics are my own personal comments/opinions/suggestions.

Pay yourself first
  • save at least 10% of your take home pay each month. Or save more if you can. The bigger the savings, the better. 
  • you should have an emergency fund equal to 3 to 6 months of your take home pay (in some references, it is suggested to be 3 to 6 months equal to your monthly expenses)
Track expenses
  • jot down in a notebook what you spend your money on. You can also make an excel file to track down and compare your expenses throughout the year or the next few years.
  • this will allow you to track where the money goes and where you can cut down. Check which items are wants and which items are needs. If you are spending too much on wants, then maybe it is time to cut down on your spending. This will in turn increase your savings. 
Work out a budget
  • determine how much money you have to spend each week
  • first subtract your savings from your salary, then your regular expenses. Divide the remainder by four (4 weeks in a month). Remember, pay yourself first.
Pay bills promptly
  • pay your bills in full and on time to avoid incurring additional interest for late payments. This is specially for credit card bills. Better if you can regulate your use of credit cards and not to max out your credit limit (unless, of course, you have enough money to pay for the full bill when the due date comes, with savings already set aside).
Good fit
  • be sure the insurance policy you buy suits your needs. But you first have to determine what or how much coverage you need. And always be on the look out for promotional premium payments.
  • understand what your insurance policy covers. Check the brochure, double check the contract. Ask questions when something is not clear to you. Insurance companies do change coverage (new additions or new exclusions, higher or lower coverage, etc) so always be updated.
  • pay attention to exclusions and other important terms in your policy contract. If you already have the contract, it is best to review it and highlight the important parts (eg. coverage, exclusions, dates, conditions, etc)
Discount trap
  • you need a shirt, but you get a discount if you buy three. To save money, stick to buying one. Don't spend on something you don't need. Although I have to say, sometimes it is hard to let the good deal pass. Just make sure you will be able to use the things you are going to buy. And by use I mean use regularly.

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