Financial Freedom SG

In this period of economic uncertainties, it is essential that we save money to prepare for any eventuality, like being laid off. To have spare cash that we can fall back on makes sleeping at night easier if we should lose our jobs. As a rough guide having at least 6 months worth of normal expenditure is the minimum- at least for myself and my wife.

After you have at least that amount, you can invest the rest of the money you accumulate so that you can better prepare for retirement.

So how does one save money?

10. Get a pay raise
If you are able to command a pay raise through your abilities and knowledge, getting a pay increase is one way in which you can get the money to squirrel away in your savings account. Before going to the boss to ask for one, make sure you have a strong case so list your contributions to the company and be prepared to show how much you have helped the company save or how much you have contributed to the bottom line.

However, in this time of economic uncertainty, our bosses would be very unlikely to agree to any increase, much less a huge increase especially if they see the company to be operating in difficult times or going to run into trouble.

9. Look for alternative income streams
Write a book. Take a part time job. Make a list of things you don't need to sell online. Ask around to check if people need babysitting services, tutoring, a handyman etc.

Better yet, find out more about investing and see if it can help you generate income from dividend payout or interest payments for maturing bonds which you have invested.

8. Stay at home
The logic being, if you aren't out there, you are not spending your hard earned cash on dinner out, cinema ticket, more clothes you don't wear etc. Being an introvert and anti-social helps in this type of economic conditions. Go out only when you need to buy groceries like milk and bread to fill up your stomach.

7. No 0% installments or interest free loans
When you want to get that second or third laptop for your home or that huge 42 inch plasma tv, you think that you can afford it because the retailer allows you to pay the amount over 24 months interest free. Don't. It means that your pay is cut, and you have less money to spend plus save. Deferred gratification is the key word, anything you cannot afford to pay off immediately, you do not need.

6. Cut up your credit card
I had to pay off over $4000 in credit card payments recently because of a trip to Japan. There were times when I forgot to pay the bank and was slapped with late payment and interest payments although I could afford to pay in full. I am seriously thinking of either not using any cards or just have one card. Luckily, I worked in the bank before and know that if you are late in payment, you can actually call the bank to ask them for a waiver. Else, cancel the card. You'd be better off without it.

5. Housebrands vs Luxury
Do you need that branded polisher? Or that branded washing detergent, or that branded toilet paper and tissue box? Get the housebrand. It works as well as the branded cousin and more importantly, it is cheaper.

4. Needs vs Wants
Warren Buffet does not travel around by private jet while the 3 CEOs of failing auto companies travel by private jets while asking the government for a bail out, it goes to illustrate very nicely what is a need and what is a want.

Read this article about how cheap one of the richest person is who did not want to pay the author of the blog his $8 chicken meal. There is no free lunch in the world.

Get the cheapest you can find for your needs and push off what you want as long as possible, until either it becomes a need or it becomes cheap. But once in a long while, you can have a nice treat and eat the Ben & Jerry's.

3. Pay yourself first
Have two bank accounts and once your pay is in, take out the amount you want to save and pay yourself first by putting the amount in your designated saving account. The other account is your current account where you draw it down with your expenditure. Tell your bank you don't need a card or a cheque for your savings account so that it becomes a hassle for you to withdraw your money from the savings account.

2. Keep a budget
55% of millionaires have a budget and keep to it. If you want to be one, you need to keep a budget and analyse what you spend. You'd be able to know where your money goes to and see how you can save more by cutting away frivolous spending.

1. Save more than you spend.