Three possible ways to build our savings (Don't see money, won't spend money).

I know someone who finds it very hard to save money. 

He has hardly any savings as he spends money very freely. He sees, he likes, he buys. 

He is also generous to a fault. 

So, you can imagine that he is rather popular amongst his friends.




When I asked him if he was worried about having very little savings, he replied that there is always next month's pay cheque. 

This feeling of invincibility in an environment of extremely low unemployment in Singapore could be increasingly common but that is another topic.

Anyway, as I talked to him, I found that he is really a very pleasant person. No airs and not given to showing off. 

He is simply very easy with money.




He vaguely knows the importance of saving but being very comfortable now, he just spends freely. It has become a habit. 

So, since we arrived at the conclusion that if he sees money, he would be inclined to spend it, the only way for him to save is not to see the money.

Top up CPF-SA.

I suggested that he does the following:

1. 
Start an SRS account and contribute the maximum of S$ 12,750 a year. (From 2016: $15,300).

2. Minimum Sum Top Up of $7,000 a year to his CPF-Special Account.

3. Religiously lock up 10% of his monthly take home pay in 12 months fixed deposits with the auto renewal option intact.




#1 and #2 will also help in reducing the amount of income tax payable while #3 will help to create a higher level of liquidity. He needs to build up an emergency fund pronto.

Having never given much thought to how he should build up his savings, he said that the suggestions are practicable and also practical. 

He decided to adopt all three measures. 

I am glad I was able to help him take an important step towards personal financial security.




If we know people who make a good salary but have trouble with saving money due to spending habits, talk to them. 

We would be doing a good deed.

Related posts:
1. The very first step to becoming richer.
2. A common piece of advice on savings.
3. Build a bigger retirement fund: CPF-SA.
4. SRS: A brief analysis.
5. Ambassadors of financial freedom.

Are you ready to come out on top from a recession? (Part 2)

Think that a recession will be beneficial to you? 

Ask if you have these:

1. Certainty that you will not lose your job or take a pay cut if you still need the income.

2. Certainty that you do not have debts which might turn crippling.

3. Certainty that you have the funds to take advantage of any value for money investments.





Of course, you know what they say about the only two things which are naturally certain in this world and they are none of the above.

The first statement is basically the most important for the majority of us. 

How to have a secure income? 

Work in the civil service? 

That is the closest to an iron rice bowl I can think of. 

If we do not have an iron rice bowl, we better be thinking of having more than one rice bowl just in case.





The second statement is an important consideration for anyone who has debt. 

Anyone from the middle income category devoting more than 60% of his monthly income to debt servicing, in my opinion, is running a big risk. 

This is also why the government came up with the latest property cooling measures to prevent people from over extending themselves.





The third statement is something that regular readers are familiar with. 

We must have a war chest. 

Now, this war chest is not money we set aside in case of an emergency. 

This war chest is money in excess of that emergency fund. 

It is truly money that we can afford to lose. 

I mean we wouldn't want to lose it but if we should lose it, it should not sink us into financial difficulty.

For a recession to be good for us, we must be in a good condition. 

Are you ready?






Related posts:
1. Do you want to be richer?
2. Get on top of your finances.
3. Be prepared for war!
4. Are you ready to come out on top from a recession? (Part 1)