During a long commute, have you ever caught yourself thinking about how great it would be if you had a lot of money? You could pay off your debts, invest in everything from stocks and shares to real estate, take a trip around the world, retire before you hit 40, and sleep blissfully without a care in the world.
If only you could find Aladdin’s magic lamp and have a genie grant your wishes. But all you can do is save some money in the hope of funding your dreams. But the amount isn’t considerable enough to even fund a portion of your dreams. So, what do you do when you have big dreams and small savings?
1. Convert your dreams to goals
Is it your dream to own buy a nice car before you turn 30? Do you dream of travelling the world and eating at Michelin-starred restaurants from all over? Well, the first step is to stop dreaming. Make these goals to work towards.
Sounds great. But what’s to say that this will help you achieve your goals with your limited savings? How do you take a goal that is at times nebulous and turn it into something that is achievable?
By following the next step, of course!
2. Break down your goals
If your goal is to save S$50,000 in two years, you need to break in down into realistic and manageable milestones. S$50,000 becomes S$25,000 a year, S$2,084 a month and eventually S$490 a week. Looking at it this way makes your goal much easier to imagine; or you might realise that it’s impossible to achieve because you only earn S$2,500 a month.
So, wanting to save S$50,000 in 2 years is a realistic goal only if putting aside S$2,084 each month is a realistic goal.
Okay, now you have a realistic plan. But how do you save more money when the numbers on your paycheque haven’t changed?
3. Reconsider the extras
How much money are you spending on coffee each day? Some people drink 3 cups of Starbucks a day, and others drink the same amount from their free Nespresso machine in the office. Both will give your energy level a jolt, but the former also costs you S$20 a day.
The same goes for the ‘occasional’ drink after work. It seems absolutely necessary because we’re all under stress at work, but if you’re on a budget and have a goal to achieve, you need to recalibrate your lifestyle. These and many more are easy expenses to cut back on.
4. Try ‘anti-budgeting’
Tired of everyone (including us) telling you to create a budget and stick to it? Well, if you have tried and failed at budgeting, then you should try the anti-budget.
The anti-budget, if you haven’t already figured out, isn’t a budget. All you need to do is set a savings goal for yourself. As soon as you receive your paycheque, take that amount (10% for example) and save it immediately. #PayYourselfFirst
Spend the remaining amount however you want, but you have to take it as you didn’t have that extra 10% put aside at all.
5. Identify your spending trigger
“All it takes is a little willpower”. We bet you have heard this statement so often that you have come to expect it to be a part of everything you try. From the latest diet to money management everyone will tell you that the key to success is willpower.
Well, willpower is grossly overrated. Even a “little willpower” is difficult to practice. Especially when it comes to spending.
So, don’t practice willpower. Practice identifying what makes you spend instead.
For example, if you shop online often for things you don’t even need, think about why you are shopping. You shop for a number of reasons. You could be bored, you may like receiving parcels or you may be hoping to impress people with all of your new purchases. The point is, you need to identify the reason behind your need to spend. If it is because of boredom, then instead of shopping when you are bored, go for a swim, watch Netflix or read a book. Redirect the reason behind the trigger and you will soon realise that you have more money to put aside as savings.
Now that you know how to convert your dreams into reality, get working. Not enough money to begin with? Here are 31 ways you can make extra money on the side, or you could pick up more tips on how to negotiate for a better salary.