We get our salary on the first of the month and we are broke by the 15th. We splurge on shopping, dining out, clubbing, and pay our credit card bills – and there, the bank account is almost empty. After that, we start rationing the remaining money and live the life of the urban poor.
So many of us belong to this category these days that it’s not even funny. And when things get un-funny, you need to find ways to get out of it.
First of all, it’s not good for your financial wellness, and secondly, worrying about money stresses you out. Is there any way to stop living from paycheck-to-paycheck, you ask? Of course!
Here are some guidelines to follow to stop being a working poor and to start saving.
1. Identify your expenses and cut them down little by little
You don’t need to take drastic steps right away and throw your life out of rhythm. Take stock of your monthly expenditure – make a note of all the expenses. Or be smart and track your credit and debit card spends through money management apps such as Good Budget or Wally.
See which category takes the most out of your wallet, and start cutting down costs in that category bit by bit. If there are unnecessary spends – such as a gym membership or cable service that you don’t use, stop subscribing to them. Aim to cut down your major expenses by half within 3 months.
2. Compare your income with expenses and create a budget
While you’re tracking your expenditure, be sure to compare it with your income. If your expenses are more than or equal to your income, you are definitely living beyond your means.
Start making a budget marking specific amounts to each spending category, and stick to those numbers for the month. Learn to say no when your friends jio you to hang out with them at the newest cafe every week.
3. Buy cheaper stuff
No, we are not asking you to buy used clothes. All you need to do is find a cheaper alternative for some of your big spends, such as entertainment and salon trips. Of course, you won’t be able to substitute everything, but there are a lot of items where you can avoid paying a bomb.
4. Look for free ways to have fun
Don’t get depressed about being broke and unable to have fun – instead, entertain yourself with free and fun options such as these.
5. Stop using your credit card
The more you use your credit card frivolously, the more of your salary you end up laying aside towards paying the bill. So don’t use your credit card for a few months, and attune yourself to spending only as much as your savings or checking account holds.
If you have more than one credit card, you need to be all the more careful about their use.
Once you’re used to spending within your means and buying only what you need, you can get back to using your credit card. But remember, use your card as a means of payment, not as a way of paying for something you don’t actually have money for.
6. Supplement your income with freelancing or part-time job
If you have a skill that can earn you some extra income on the side, go for freelancing or part-time jobs. They can help supplement your current income and allow you to get ahead of your debts and expenses in the short term. Just make sure that you don’t end up spending more because you have more money in hand.
7. Invest and save
You may think you’re too young to start saving, but keeping aside an emergency fund will be very useful in case of unforeseen circumstances such as an accident, or when you want to take a break from your work.
There are several investment options in Singapore – from the humble fixed deposits to unit trusts and endowment life insurance policies. Do your research and take your pick from an investment tool that is best suited to your risk profile and affordability. Try to save at least 30% of your salary every month on more than one investment instrument.
8. Admit there’s a problem and ask for help
You don’t need to spend more money on consulting experts on money management. Once you’ve accepted that you have a problem, you should seek help. Get your spouse, the friendly parent, or a close friend to help you keep a rein on your expenses. Every time you are lured to spend where you shouldn’t, this money buddy can help you say no to the temptation.
The most important thing when trying to get out of the urban poor cycle is to be determined and say no to yourself or to your friends when it comes to expensive temptations. If you can control your expenses for at least a year, you will have enough money to give you some breathing space. Hopefully, by then you would have become more sagacious with money, and our goal would have been accomplished!
Don’t forget to check out these posts on money management: