Whether it's to buy a big-ticket item, or simply to prepare for the worst, saving is an important part of managing your finances. While we can all agree that putting money aside is something that we should do, this isn't easy for everyone.
Despite the fact that migrant domestic workers contribute significantly to the Singaporean economy, financial exclusion is still an issue that many face. In 2019, almost 50% of workers didn't have a bank account and a third were in debt often due to family emergencies. Although we can never foresee these large expenses, preparing for them with savings on the side is a great way to avoid being sidetracked from achieving other financial goals.
How much should I be saving each month?
There is no hard and fast rule for the amount of savings that should come out of your salary each month. Depending on your financial situation and goals, a different percentage of your budget will be dedicated to savings.
Regardless of your financial goals, it is generally recommended to have a "rainy day" fund that can allow you to cover 3 months of your expenses or pay for unexpected emergencies such as car repairs or medical bills. On top of this, you may have additional items that you are saving for; this could be saving for a new phone, or for an expensive trip. Based on these goals, you might have to save more of your salary than others.
A general rule of thumb is to break down your salary following the 50/30/20 rule:
50% of your expenses should be for "needs" such as housing, transport, groceries and insurance or loan repayments.
30% of your salary should go towards any "wants" such as shopping or eating out.
Finally, the remaining 20% should go towards your savings account.
If you find that your "needs" are lower, maybe because you don't have to pay for housing, you can increase your savings to achieve your other financial goals faster!
How can I save better?
Everyone has different ways to save which may work best for them. One of the first steps towards managing your savings better is by setting yourself financial goals; these should be realistic based on your income, and also give you an idea of the amount you need to save for a certain date.
Do you want to have $1,000 saved in your emergency fund in the next 3 months? Are you travelling overseas next year and need $500 to pay for flights?
Writing down each of your goals will help you see how much you need to save to achieve of these.
Create different accounts
We've all been guilty of spending a part of our pay check that we should be putting into savings. Making sure you have a separate account for your savings is already a great first step to avoiding spending that money.
If you have several savings goals, it can also be helpful to create different accounts or pots for each of these. This not only means that you won't spend this money that is put aside, but that you can track your progress for each of your savings goals!
The JiPay Personal Account for helpers has a savings pot exactly for this purpose. You can use it to separate your savings from your spending money, so that you don't have to worry about dipping into your savings when you pay with your JiPay card!
Transfer savings directly from your salary
Contributing to your savings account should become a normal part of your budgeting routine. Each time you receive your pay check, transfer the portion that is for savings directly to your savings accounts.
If it's possible, you can also set up automatic transfers for your payday so that this is done for you without even having to think about it!
I've achieved my savings goals... what next?
Congratulations, this is an achievement to be very proud of! Once you achieve a certain goal, it can be easy to lose motivation to keep saving. However, this should continue to be a part of your financial routine.
If you can, it's always great to be able to increase the amount you save in your emergency fund. Otherwise, have a think of any new financial goals you can set yourself. Maybe you want to save more for your retirement, or a gift for your family and friends. Whatever it is, it's always great to keep your savings in shape!
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