You might earn a big salary with a bunch of zeros tacked on the end, but without smart money management, even the highest salary can leave you feeling financially strained.
Picture this: it’s the middle of the month, and you realise your paycheck is almost gone. Where did all that money go? This is a common dilemma. Managing money effectively requires good habits, and without them, even a decent salary can vanish quickly, leaving you feeling stressed and worried about your finances.
You’ve probably heard that saving money in your 20s will make your 30s and 40s easier. But how do you actually make that happen? The best advice from successful investor Warren Buffet is:
“Don't save what's left after spending; spend what's left after saving.”
In other words, prioritise your savings first, and then budget the rest for spending. It is a simple yet powerful shift in mindset that can significantly improve your financial situation.
Mastering your finances
Growing your wealth isn't just about how much you earn—it's about how wisely you manage and use your earnings. Here are some practical tips to help you get started:
1) Set clear goals
Understand what you’re saving for. Whether it’s a house, a car, or an emergency fund, having a clear goal in mind makes it easier to stay motivated and disciplined. Specific goals provide direction and help you measure your progress.
2) Cut unnecessary expenses
Take a close look at your spending habits and identify non-essential expenses that you can cut. Small, everyday changes can lead to significant savings over time. For instance, brewing your coffee at home instead of buying it daily, or reviewing subscription services you no longer use, can make a big difference.
3) Regularly contribute to your savings
Allocate a portion of your income and/or bonus to savings, in addition to covering your necessities. If your financial situation allows, consider contributing more than the minimum to your EPF to accelerate your retirement savings’ growth.
Take advantage of our Voluntary Contribution offerings to boost your EPF savings
4) Automate savings
One of the easiest ways to ensure you save consistently is to set up automatic transfers to your savings account. This "set it and forget it" approach eliminates the temptation to spend money that should be saved, making it easier to build your nest egg without thinking about it.
Why your savings might not be growing
How you save money is influenced by your mindset, upbringing, and surroundings. Recognising this is the first step toward improving your financial habits. Let's explore some common reasons why you might struggle to save:
It’s easy to justify small splurges, but they add up quickly. Instead of giving in to impulse buys, set a budget for discretionary spending and stick to it.
“I deserve to upgrade my lifestyle.”
As your income increases, it’s tempting to spend more on luxuries. However, this can prevent you from saving. Keep your living expenses in check and funnel extra income into savings or investments.
“I didn’t see that coming.”
Unexpected costs like car repairs or medical bills can drain your savings. Regularly setting aside money for these unforeseen events can help maintain your financial stability. Aim for an emergency fund covering six months of expenses. This fund will act as a financial buffer, ensuring you're prepared for any unexpected financial challenges.
“I’ll start saving next month.”
Procrastination can delay your savings growth. Begin saving now, even if it’s a small amount, to build a habit and create a financial cushion for the future.