Achieving Financial Goals: A Simple 7-Step Guide

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Have you ever said you’re going to set aside an X amount of money every month, only find yourself woefully low on funds and hoping you’d get by till the next pay cheque?

You can give yourself any amount of excuses you like. Oh, it was your best friend’s wedding, or your car was due for a service or you had to pay off your insurance premiums.

The truth is, if you’re finding yourself running low on funds at the end of every month, what you’re trying to do to save is not working. But here are some options that could work.

1. List out what you need and then prioritise

Image of a checklist in a notebook

Even before your salary is in the bank, make a list. List out all the payments that you need to make towards utilities, rent, supplies, etc.

List out anything that you need to buy this month. Now that you have a list, get rid of anything on that list which isn’t a dire necessity. You should now have a list of the expenses for the month. And it is this list that we are going to use to make a budget for the month.

2. Make a budget and monitor where your money is going

Image of a calculator with pen and a budget

Making and, more importantly, sticking to a budget is a must especially when you’re trying to save. The earlier you start, the better. You don’t have to wait for the next New Year’s resolution. You can start off today.

Read also: Be Thrifty Now to Thrive in Your 30s

When starting off with a budget, the simpler you keep it, the more likely you are to stick to it. There are plenty of apps available in the market that can help you plan your monthly expenses. Gone are the days of pens and papers. With these apps, you can track your expenditure on the go, and make sure you don’t overspend. If you do nothing else, just get one of these apps and start using it.

When you’re just starting out your professional career, your financial obligations are lesser and as such, is the ideal time to increase your savings. The first thing to do when you start working is to open a high-interest savings account. It’s important to make sure any savings you have isn’t sitting idle.

The main goal of creating a budget is to ensure your expenses don’t go beyond your income. The best way to do this is to track your expenses and see where your money is going.

3. Have an achievable goal in mind

Image of a notebook, pen and coffee with a list of goals

Saying that you’re going to start saving is all well and good but will your savings be enough for your needs and wants? Can you make that road trip in the U.S. come true in 2 years’ time or will you have enough when you get married in 4 years’ time?

It’s great to have a savings goal in mind. But approaching it the wrong way can make the process necessarily difficult.

When we start off our savings, we tend to try to do too much in too little time. You end up setting an unrealistic budget and when you fall off the wagon, you might get discouraged and abandon the plan altogether.

Having a framework to your savings is crucial to its success.

Split your goals into categories of short-term, medium-term and long-term goals. For example, a short-term goal might be to set aside S$10,000 in your savings account in a span of 12 months. A medium-term goal would be to have more than S$40,000 in this account within 3 years. A long-term goal would be to have enough money in this account to kick start your dream of starting your own business in about 8 years.

Related: Living Paycheck to Paycheck? 8 Steps to Break the Cycle of Urban Poverty

4. Create an emergency fund for rainy days

Image of money and a locked box

While saving up for your house, a car or your child’s education is important, it is equally important that you put money aside for emergencies. Some banks like OCBC have a ‘savings jar’ function in their online banking platform. This allows you to channel some of your savings every month into a virtual savings jar, making it harder for you to withdraw or use the money.

Use such functions or open a separate savings account to build up your rainy day fund. Do this without fail and soon you’ll have money for emergencies.

Just remember, your favourite jacket on sale is NOT an emergency. You mustn’t use the money from this account for such things. Keep this money aside for sudden hospitalisation or job losses.

Related: 6 Money Mistakes Singaporeans in Their 20s Are Making

5. Invest early and let your money work for you

Image of a computer mouse, tax forms and pen

Having savings and an emergency nest to fall back on is great but savings alone cannot be your retirement plan. Thanks to inflation, what you save today will be worth a lot less ten years from now. On the flip side, thanks to the power of compounding, what you save and invest today will be worth a lot more in future. Avoid leaving your savings idle and invest them in the right instruments to get the best returns and maximise your savings.

Related: Investing with Your CPF Savings: A Quick Guide to Get Started

A good portfolio of investments should have a mix of high, moderate and low-risk investments. Look for investments that offer short-term or long-term returns. Do your research before getting into riskier equities. You could always employ the services of an investment advisor.

Related: 10 Questions You Should Ask Your Investment Advisor

6. Clear your loans and credit cards debts

Whether it is a home loan or a credit card bill, make sure you concentrate your efforts on clearing off your most costly financial commitments before you start your journey towards maximising your earnings. Clearing all the loans and credit cards will leave you with more disposable income to save and invest.

Related: Should You Pay off Your HDB Home Loan in Advance If You Can?

7. Don’t Waste!

Image of a person with empty pockets

Last but not the least, make sure you don’t waste money. While it is good to buy yourself things you want, be careful about what you spend on. There is a difference between need and want so make sure you need what you buy.

Related: 10 Things Successful People Don’t Waste Money On

The quickest way to see your earnings maximised is implementation. Implementing these tips and techniques are bound to get you closer to your goal.

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