Small Tips on Saving Plan

Hi Everyone!

Many people around me told me that saving is hard because of various stuff they have to pay like bills, groceries, entertainment, gadgets and etc. which makes them difficult to even save a decent sum of money. Indeed, nowadays it is definitely hard for people to save a decent sum of money. However, savings is still important because it will help you to cover some fees that you might not expecting like hospital bills and etc.

So in today tips, I believe is quite a common tips given by most people out in the internet but still, the tips that I am giving is based on my experience. 

Personally, I am receiving an average pay of $2,600 per month after deducting the Central Provision Fund (CPF) from my salary. This sum of money is like an average salary from people around my age (26 years old). However, if you happen to earn more then save more if not save less after all, is the compound interest that matters.

So let me start with a simple plan of saving (by per month)

1) Bill - $250 (That's quite a lot!)

2) Food + Entertainment  - $600 (Try to spend less if possible)

3) Transport -  $200 (Well, take more trains and MRT if possible)

4) Parents - $500 (That's a good amount)

5) School Loans - $100 (That's my payment)

6) Others - $150

Total amount - $1900

So, you are able to save $700 per month! So you see based on the percentage calculation, you should be able to save at least 25% of your salary or even more. So when you receive your salary, save at least 25% of it and spend the rest, that would help you on your saving's plan in the future. 

So with this savings, you can do a simple compound interest calculation, lets say you earn 0.05% per year, (For now we do a yearly computation)

700 * 12 = $8400 Per year * 1.0005 = 8404.20

(8404.20 + 8400) *1.0005 =  16812.60

(16812.60 + 8400) * 1.0005 = 25225.2084

(25225.2084 + 8400) * 1.0005 = 33642.021

(33642.021 + 8400) * 1.0005 = 42063.04

Just over 5 years, with a simple saving of $700 per month, you can have more than $42,000 of saving in your bank! Certainly, this is just a rough calculation, you will need to take into consideration of a few criteria, calculate by monthly interest, year end bonus, extra savings per month, performance bonus and etc.

This will provide you a rough guide on how to save money! IT IS a simple guide by really effective when you get to see the end result :)

Cheers to all on your money saving journey!