We are constantly faced with decisions on whether to spend or save: Buy a brown sugar milk tea from LiHO or settle for a teh bing (Iced Tea) from the coffeeshop? Shop online whenever we receive a new promo code or make time to review our budget?
As time passes, these seemingly inconsequential decisions add up in ways that shape our financial health. It is not always easy to stay committed to our money goals, but the good news is there are simple but powerful things we can do when our willpower fails us.
Why monthly savings are important
Your personal savings rate is one of the most important factors in achieving financial independence. After all, don’t you want the freedom to make choices in your life – jetting off for a holiday whenever you want to, starting your own business, or retiring early – without worrying about your paycheck?
To do so, you need to save. Many sources recommend saving 20% of your income every month. According to the popular 50/30/20 rule, you should set aside 50% of your monthly budget for essentials like utilities, food and transport, 30% for discretionary spending like dining and entertainment, and 20% for savings and investments.
While Yolo (You only live once) is a trend, saving for a rainy day is also a traditional saying from the past. When the impossible hits you such as the Covid-19 pandemic, these are the times when you may need to dig deep into the savings which you have built over the years.
Effective May 2019, the Open Electricity Market (OEM) allows all Singapore residential households to make the choice to switch to a private electricity retailer such as Ohm Energy. Many who have switched out have observed a 20%-30% savings on their electricity bills. You can visit https://www.ohm.sg to find out more about Ohm Energy’s price plans and choose one which is the most suitable for you. Ohm has also partnered with SP Group, so your billing and payment arrangement remains the same.
If you are a new Ohm customer, use the promocode “OHM30SYFE” to get a S$30 sign-up bonus when you successfully switch to Ohm. That means that you get even more savings.
Make saving easier with automation
Saving money can seem difficult, especially when it means putting off your wants and needs of today for the distant future. But putting money aside regularly is the foundation of wealth building. To ensure you follow through on your saving goals, consider automating your savings.
Decide on an amount you can commit to saving consistently and have it transferred automatically from your checking account to a separate savings account every time your paycheck comes in. Automating this process means you do not have to think about saving – making it much more unlikely you will “forget” to set aside money in your savings account after spending and paying bills.
Not having all your money available in your checking account naturally means you will spend less on the things you do not need. You will tend to spend more consciously knowing that you will have to transfer money from your savings account to your checking account if you overspend.
Automate your investments
With your savings on autopilot, the next important step is to set up automatic investing. Saving is important, but don’t forget that bank interest rates are at an all-time low. If you want to make the most of your money, you need to invest.
One strategy to get into the habit of regular investing is dollar cost averaging. The idea is that by consistently investing a fixed sum of money over a period, you end up buying more shares when prices are low and fewer shares when prices are high. Over the long term, the cost of all your investments purchased are averaged out.
Because you are investing consistently regardless of market conditions, dollar cost averaging helps investors curb the tendency to time the market or give in to certain investing biases. For a more effortless way to build wealth, the dollar cost averaging process can be automated as well when you invest with a digital wealth manager such as Syfe.
If you are a Syfe client, making automatic deposits into your Syfe account is as simple as setting up a recurring transfer from your checking account with your bank. You decide how often you want to invest (weekly, monthly etc.), your investment amount, then confirm and submit your recurring transfer request to your bank.
Never miss another bill payment
If you have not automated your savings and investments, automating your bill payments is the next logical step. This ensures your utility bill or other payments are never late, so you do not incur costly late charge fees and interest charges. Setting up GIRO payments to pay your bills is hassle-free, and since those bills will be paid automatically, you also free up your own time for other things that matter.
Take willpower out of the equation
Staying on track with your long-term financial goals requires a lot of willpower and effort. Automating your finances bypasses the stress and makes it easier to reach your goals. By taking some time to set up all your automated processes today, you are setting yourself up for future success: saving and investing more, spending less, and saving valuable time.
Ready to get started? Get a 6-month management fee waiver on your investments when you open a Syfe account and use the promo code “OHMSYFE”. Up to S$20,000 of your assets under management will be managed for free for 6 months.
This article is written in collaboration with Syfe and Ohm Energy. This collaboration is uniquely available to Syfe and Ohm Customers only. You have the power to choose your electricity retailer and you may channel your savings to a robo-advisor such as Syfe who does the investing/goal settings for you. There is no minimum sum to sign up for a Syfe account. Under this collaboration, you get savings for switching to Ohm as well as a 6-month management fee waiver on your investments when you open a Syfe account and for up to S$20,000.