The concept of saving might be simple, it’s an act that some of us struggle with on a daily basis. Part of the struggle is because of savings myth that are crippling our savings mindset. So, here are four common myths about savings that are hurting your savings game plan you need to change today.
In the past, your parents or grandparents might have kept their savings in the milo tin under their bed. But nowadays, the bank has replaced milo tins as the savings buddy of almost everyone. With the convenience that banks offer you in withdrawing and spending your savings, it is no wonder people rely so much on banks to be our savings buddy.
However, if you really want to be the ultimate saver, you need to start exploring new savings product than just putting your money in your bank account. This is because the bank only offers you 0.05% interest on your savings. Even with $300,000 in the bank, you will only receive $150 of interest at the end of the year. That’s pathetic, isn’t it?
If you want to improve your savings game, there are two products that you can consider: Regular savings plan and high interest savings accounts.
Under a regular savings plan, you will set aside a fixed amount to save every month. The fixed savings amount will then be used to buy shares or unit trusts that you have decided on. This is known as a dollar cost averaging strategy that more savvy investors will be familiar with. With a regular savings plan, not only can you save, you can also grow your savings.
The other product is high interest savings account. This includes OCBC 360, UOB One and DBS Multiplier. By crediting your salary into the high interest savings account, the banks will offer you 1-1.2% more interest on your savings. In addition, if you spend in another category (e.g. insurance, investment or credit card spending), you will earn even higher interest rate on your savings account balance.
Saving isn’t about letting yourself starve even when you are so hungry that you barely have energy to move. Instead, it is about spending your money at the right time and at the right places. There are various apps that you can take advantage of to get more worth out of your budget so that you can spend less and save more. Eatigo and Fave are perfect apps that help you get more bang out of your buck.
If you have been telling yourself that you are not saving because you are not earning enough, save that excuse. There is no such thing as a minimum salary in order to save. People who give such excuses are often those who spend first before saving.
To cultivate the habit of saving, here’s a three-step quick guide. When you receive your monthly salary, set aside the amount that you want to save. Next, split your remaining salary into different categories that you foresee spending on (e.g. grocery, transport, food and shopping). Lastly, keep within the budget that you have set for yourself.
It is a common misconception that credit cards are the bane of savers. Credit cards encourage you to spend and to splurge. Moreover, the interest rate on unpaid credit card bills can be crazy and scary. But if you are able to maintain financial discipline, credit cards are actually useful in helping you save.
Credit cards offer cashback on various types of spending. For example, POSB’s Everyday Card allows you to get rebate for pumping petrol at SPC. If you are an avid online shopper, DBS’ Live Fresh Card offers you 5% cashback on online shopping.
Find out what are the best credit cards for your desired purpose here.