Singapore might be an expensive place to live in but that didn’t stop our new contributor, Budget Babe. She explains how she managed to save S$20,000 in 2014 despite just earning S$2,500 a month.
Words by Budget Babe
In the closing stages of December, I analysed my finances across the past 12 months, and realised quite amazingly that I managed to accumulate $20,000 in 2014 alone! I graduated recently and have been working for just slightly over a year. My starting pay was $2,500 and I’ve stopped taking money from my parents since I was 18. In fact, I give my parents S$200 each every month.
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
How did I do it?
- Open up separate bank accounts
All the way until university, I always had one main bank account (POSB) which I save and spend from. When I graduated, I decided to open up another separate account and set it as my Savings account.
All my income went straight into this Savings account, and I would transfer about S$1,000 every few months into my spending account for my own usage. By saving before I spend, I managed to save at least half of my monthly income each time.
- Track all my expenses
I use a free app called Expense Manager (available on Android). It may sound troublesome, but it actually takes no longer than five seconds each time to key in your expenditure and less than five minutes at the end of every day to recap and input every spending at one shot.
What I love about it is that the app also allows users to customise and create their own categories, so you can track where your money is going into. Based on the past year, these are the following categories I found myself spending the most on:
Bills / Liabilities –> Dance –> Travel (Holidays) –> Food –> Transport
Tracking your expenses also helps you to know where you can or should be cutting down the following month if you wish to save more.
- Eat cheap and avoid cafes
Ever since the cafe trend started a few years ago, Singaporeans have been frequently choosing cafes as their choice for hangout places and meals. Since you get to show off Instagram-worthy moments at the same time, why not right?
But I started feeling the pinch after a few trips there with friends. On average, a cafe meal sets you back by between S$18 and S$30, and if you visit cafes once a week like most of my friends do, that can add up to quite a bit. The same amount could probably feed you hawker food for two weeks.
So I decided to start packing my own office lunches or eat at hawkers or food courts whenever I got the chance. My cafe expenses dropped from S$150 in March to S$20 the following month.
- Skip the morning coffee
99 percent of people cannot survive at work without their morning coffee. Okay, I exaggerate, but I’m one of those who can’t live without my morning cuppa.
However, if you spend S$7 on Starbucks every day, that adds up to a ridiculous S$100 or more on coffee alone every month!
I have SO MANY friends who are Starbucks gold card members and are always posting photos of their Starbucks coffees on Instagram. I can never understand or justify spending this much on just coffee. My solution? Just buy powdered coffee and make your own every morning in the pantry. Or even better, if your workplace has a free coffee machine, use it!
- Take advantage of credit card promotions
Many people are scared to use their credit cards. I don’t blame them, especially after reading about so many people fall into insane credit card debts. But if you are disciplined, spending on your credit card can actually give you much more than using cash.
Of course, do make sure you have the money to pay off your bills and try to track your credit expenses so you won’t end up over-spending! Always pay off your bills in time too. The overdue interest fees can add up.
Here are some offers that I frequently take advantage of:
Citibank SMRT Visa: To chalk up SMRT$ each time I travel.
Travel Smart Rewards: LTA is currently running a reward campaign with SMRT for people who travel during off-peak hours. Register at their website and start claiming your money now! In November, I claimed S$9 just for my trips alone.
OCBC 365 Credit Card: I shop online a lot, and this card gives me the highest returns for my spending so far. (Update: Apparently Frank gives 6% cashback, more than the 365 card’s 3%)
DBS Movie Discounts: S$1 off each time + popcorn offers
Citibank / OCBC Travel Insurance: Free each time you book air tickets using your credit card! I no longer buy tickets together with my friends but rather pay for mine separately so I can claim my free insurance and save between S$30 and S$100 each trip.
- Cut down on nightlife expenses
Ever since I started work, it’s become almost impossible for me to go for weekday Ladies’ Nights. Clubbing on Fridays or Saturdays becomes the more realistic alternative, but even though I usually get in for free, the cab rides home do add up! Plus, you tend to lose control of your wallet strings when you’re intoxicated and can easily end up spending a bomb on drinks.
Between 2011 and 2013, I was clubbing and drinking a lot. In 2014, I cut down to once or twice every few months and I’ve seen an incredible reduction in my expenses, giving me more to save.
As a result of all these little tips and tricks, I managed to chalk up S$20,000 in savings in 2014, which is a huge feat considering my monthly pay. Although I eventually spent a fair bit on travelling for holidays (to make up for my lack of a graduation trip), I managed to stretch my dollar by making S$10,000 count for six countries (Asia + Europe) for a total of 35+ days!
This article originally appeared on Budget Babe’s blog and has been republished here with permission.