2011 is upon us. In a couple of hours, fireworks will light the sky and parties will last till the wee hours of the morning. In the spirit of making the coming year a good one, here's a list of things that one can do to financially improve oneself.
1) Set a Budget for the Month
At the start of every month, withdraw your "allowance" and stash it at home, setting yourself a spending limit per day. Cater an additional sum for transport, fuel and parking coupons if you drive, handphone bills, and whatever monthly bills you have. Personally, I tend to top up a $100 into my MRT (that's our train here for non-local readers) card each month regardless whether I finish up the previous $100 or not. This ensures that I'll always have enough to travel should I run out of actual cash.
Also, try to set aside an emergency amount per month too, which acts as a buffer for unforeseen circumstances. At the end of each month, any leftovers can either be used to treat yourself and/or loved ones to something or to add into your 6- month savings account.
2) Pay in Cash Where Possible
Studies have shown that people are less likely to spend when they use cash versus credit cards because they feel the pinch when handing over their cash. This allows a higher chance that we buy only the things we really need or want and not spend blatantly. Also, spending by cash allows you to see how much you have left thereby allowing you to figure out how to stretch your cash till the end of the month.
3) Save for Big Things
We all have our wants. A simple way to fulfill this is to set aside a monthly amount that is catered to this. Therefore, when the item of our desire presents itself, be it a new wallet or a branded bag, we'll have the cash ready for it.
4) Make Use of Promotions. Use Loyalty Cards and Discount Coupons
Make use of specials and promotions to stock up on things you need monthly. This includes facial products, nail polish and whatever knickknacks which helps reduce your spending in the long run as you'll be saving on things you need. Note the word "need".
Points gained from loyalty cards will also help offset expenses. Discount coupons, normally found in the mail though intended to make one spend, is most welcomed if they refer to things you would normally spend on anyway.
However, that said, beware of the trap of buying things that you do not need or buying just because the item is on discount. You'll end up broke much quicker. A discipline approach is necessary.
5) Delay Spending
Try to put off buying an item for a week or two. This allows you to think about the purchase more preventing impulse buying.
6) Choose the Cheaper Alternatives
Spending time with friends and/or family needn't be a wallet breaker. Instead of spending time at the neighbourhood Starbucks, a hang out at the coffeeshop or a cheaper cafe may prove just as or even more satisfying. Also, you could decide to hang out at free public spots such as the beaches and parks, where the money saved could be put to better use.
For drivers, Orchard and town area carparks differ in charges. A bit of research into the charges at each venue will help you plan where to park thereby reducing unnecessary spending.
7) Set Up a Savings Plan
I cannot fully emphasize the importance of saving. As hard as it may seem to do, having a stash of cash lying somewhere is crucial especially in times of emergency.
One painless way is to set up an automatic deduction that transfers a portion of your pay into a savings account. By doing this every month, you'll realize you're not missing the cash and sooner or later, you'd have amassed a substantial amount. You'll feel most achieved when that happens I guarantee.
To your 2011.
Cheers,
~K
Hi K,
ReplyDeleteLet me share with you my experiences with relation to the points you mentioned :)
1. I don't budget for routine items like transport and food. They usually don't put a big dent and I've rather consistent habits. I budget for big ticket items like marriage and housing etc..Basically if it runs into thousands, I'll budget it. Hundreds are okay :)
2. I used to pay almost everything in cash/nets. But now, I try my best to pay as much of my stuff using credit card as possible. Why? There are cash rebates/points/discounts when using credit cards. Furthermore, I can control my cash flow better by deciding when to pay for my purchases. There won't be a problem of overspending because I keep an itemized expenditure tracking, meaning that for every item I spent, I'll record it down. Not using credit card doesn't solve the problem of overspending, I think keeping detailed records will stop you from spending :)
3. I do that :) In fact, I save big whether I have big things to buy or not, just in case :)
4. I seldom do that. It's too much hassle for me. The amt that I can save doesn't justify the rewards. Most of them are not real good deal anyway :)
5. Used to do that. Until the guitar that I wanted was sold out and out of production after waiting 1 yr. Since then, I don't waste time deliberating on things that I want. Oh, I make snap decision these days too, haha
6. I never go for cheap alternatives. I go for more value. Used to wear bata shoes that last me 3-6 mths for $20. I've to constantly buy and get a new pair, which is a time waster. Switched to clarke's shoes for $160, and I'm still wearing that pair for almost 2 yrs. Never go for cheaper alternatives, go for the best value that your money can buy you.
7. I have my yearly target to save, broken up into monthly targets. I'll pay myself first, spend a bit and roll the savings over for the next monthly target. Basically once I reached my target for the year, I'll spend most of the money that is remaining :)
Hi LP,
ReplyDeleteThanks for sharing. Well the points I listed are rather general, I feel. You're right in pointing out the limitations of each though. But there again is the subjectivity to the context the points are applied in.
For example, in point 1, my take is that it depends on what's your pay like and at which point in life you're in. If you're spending most of your cash on things like your car and house or kids, then concentration on those may help more than focussing on the nitty gritty things like food. Unless of course you're eating in a restaurant every day that is heh.
As for point 2, the use credit cards to accumulate points is great and actually linked to point 4 but if uncontrolled may spiral to a debt trap.
Nothing to say about point 3 as we're in "agreeance". There's no such word btw haha.
Point 4 is again subjective. I tend to buy some stuff from Watsons. They have a lifetime membership card which I get points from the purchases which actually helped offset quite a sum by now. Furthermore the POSB everyday card gets me another 6% rebate on the purchases so it's quite a savings. Also I tend to eat at the Soup Spoon quite frequently. So far we've had a couple of free meals already from their loyalty card too, which works the same way as Watsons less the POSB rebate heh.
As for point 5, this is terribly subjective. If it's a collectible, then yes, snap judgement is necessary. Things like expensive restaurant dinners, the latest computer, Apple gadget etc., are always there in ample supply which can be delayed till you figure out if you really want it or like it bad enough to spend the amount on it. On the plus side, from experience you actually treasure it more compared to buying on impluse.
As for point 6, you're absolutely right in that context. Sometimes cost is never a substitute for quality. But I was referring to things like coffeeshop vs cafe or parks vs clubs or renting a DVD vs going for a movie etc. Again another point terribly subjective.
On your last point, that's quite a good way of saving too. I'll keep that in mind as another savings idea. That said, the commonality in both our comments is the pay yourself mentality which I fully subscribe to.
Happy New Year LP!
Thanks a lot for taking time to comment & share.
Cheers,
~K