Thursday, 14 August 2014

Saving During Your Growing Years

Everyone wants to be rich, don't they?

This is especially true in Singapore, where the gap between the upper and middle class are increasingly widening and the costs of living are absurdly high.

Everyone wants money. Some are content with having enough, others want more.

But before you start searching for endless ways to "get rich", ask yourself this.

"Am I Saving Enough For My Future?"

Start from the Mother of all Basics. Saving.

This is especially more so for the people who have not yet began working and are still receiving allowances from their parents. 

Students fall into this category. But how many students are actually saving their pocket money?

Parents, you have a part to play too. If your children are not taught how to save when they are young, this habit of spending whatever you give them will follow them into adulthood. Would you want to see your child in his 20-30s with little to no savings at all?

Instill into your kid the habit of saving when they're young and they will thank you when they are older.

If you do not learn how to manage your money, you put yourself at a higher risk of letting someone else (mis)manage it for you. 

Now that you're sufficiently equipped with the knowledge of the benefits of saving, let's move on to how. You may think, it's a no brainer but you'd be surprised how many Singaporeans do not have a basic strategy for saving.

If you're one of them, don't worry. It's never too late to begin saving.

Firstly, what do you do? Stick to the well known and famous 50/30/20 rule. 

You're free to adjust and customise this rule to suit your needs. This is based on a monthly allowance of SGD $400.

50% --> $200. (Transport, Food, Clothes)

30% --> $120 (Movies, Dating)

20% --> $80 (Savings)

Here we are assuming the allowance your parents are giving you are meant to cover your monthly expenses including food, clothing, transport and various needs and wants. If your parents give you an allowance and also pay for your food and clothes then switch to 50% for savings. You get the idea.

That's it. It's that simple. Customise the plan according to whichever suits you best and stick to the plan faithfully. 

If you have a bank account, and also at least 16 years of age you can do what I did. 

I had an existing POSB Savings Account. Every month my parents would credit my account with my allowance. I opened an OCBC Current Account on my own. You will need your IC and fill in some forms. With the Current Account, there was no need for a minimum sum. Make sure both your accounts are enabled for iBanking and make a monthly funds transfer of your savings the moment you get your allowance and don't bother to check on the balance.

If you don't see it, you won't spend it.

That's it! Do you agree with my saving strategy? Or you have a better one you'd like to share?
Feel free to do so!

Signing off,
Teenage Investor.

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