5 myths about saving money and what to do about them
Money, oh money. It is something many people can appreciate but not all people can see its appreciation. For certain people, balancing their savings account is easy. And then there are those who struggle to save their money and make ends meet at the same time.
Making your money grow is something that requires quite a fair amount of hard work and determination. Money makes money, that's what we all say. The rich get richer but not because of the money alone, but because they don't subscribe to these 5 myths:
You just don’t have the extra cash
Source: PIXTA
False. It’s more likely that you’ve not made a point to start saving in the first place. What’s really holding you back is the reckless bills you’re raking in every month on luxurious things — spa visits, high teas and of course, high-end fashion shopping. Or maybe it's just not keeping track of the little things that eventually add up and eat into potential savings.
Either way, examine your expenses to see where your money’s going to. There are a couple of practical apps to help you track your bills.
Seedly centralises information imported from up to five credit card and bank accounts. Your bills are organised automatically by category — transport, utilities and food for instance. Your credentials are safe as they’re never stored on the app. Seedly complies with the non-disclosure and confidentiality rules of the Monetary Authority of Singapore.
Mint has similar features, but it also alerts you when an unusual charge pops up on your account. You will also be given custom tips on how to save and reduce fees.
Both apps will give you an overview of where you’re spending wrong, and then it’s up to you to ponder on what your expenses have really been about — was that purchase a must-have or a not-really-necessary?
Your money’s safe in a savings account
Source: Thinkstock/Getty Images
Heck no! The rates of a savings account is so small you’d need a microscope to look at it. Here’s a perfect example. Citibank’s InterestPlus Savings Account gives the account holder an annual interest of 0.01% if the account balance is below $5,000. Balances that are above S30,000 get the highest rate of 0.1% per annum.
We’ve not even mentioned inflation rates that will give your money a pounding. If you want to see your savings grow, invest in bonds, unit trust or other investments to get higher returns.
The latte effect
Source: PIXTA
You feel the need to give up your weekly caramel macchiato as it’s money that can be saved. Here’s a piece of advice from Ethan Bloch, the founder of Digit. The millennial says that the latte factor is not going to make much of a difference, especially if you’re going to concentrate on the small things and ignore the bigger elephant in the room — working on building up your savings nest.
Start looking at a long-term plan. Picture this: in five years, what would you like to see as your bank account’s balance? Go for a figure that’s realistic and split it into a monthly milestone. Work towards the number that’s at the end of the line. When you’ve hit it, create more financial goals to score. You’ll be on a roll long before you realise it.
A credit card’s a dangerous thing
Source: Thinkstock/Getty Images
No, it isn’t. You are responsible for possibly making the card a hazard to your account’s funds. Here’s what you need to do. I know it’s not as easy as it sounds, but stop with the shopping thrills. Instead, add a pair of training wheels to your card by setting an auto-payment at a full 100% of your card’s balance.
Keep the card’s limit low. All it takes is a phone call most of the time. Use your card for all your transactions and earn reward points to get freebies for the funds you’ve spent.
It’s difficult to grow your money
Source: Thinkstock/Getty Images
There are so many terms that scare you when it comes to investing, such as hedging, financial analysis and share purchases.
While you do need to read and research investments you’re interested in, the process has been simplified thanks to apps such as Tradehero and BankBazaar. The former lets you open a virtual account to practice trading and shows you how to make better trade decisions through discussions, curated news and tips.
BankBazaar helps you figure out interest rates. If you don’t have the time to study investments, try simpler choices like the OCBC Blue Chip Investment Plan. Buy shares with a monthly contribution as small as S$100, and make changes as you want as there’s no lock-in period.
Plan it right
Saving money no longer correlates to setting aside your excess money at the end of the month.
It’s all about prioritising your savings first and making sure your money blossoms. With the right plan, you’d be able to make it work.
(By Annette Rowena)
Related Articles
- From Buying Bicycles to Developing Real Estate: Ryan Gwee, Group MD of ZACD
- S$100,000 in a bank account? You are losing money!
- How financial advice might surprisingly affect savings for Asians