We must emphasise that savings is an integral part of your financial growth. It’s just not about earning more money but also about saving the right way and then letting that amount find you the financial security that you would need for yourself and your family.
But where most people tend to falter is not thinking about long-term consequences. Financial planning offers you the opportunity to think ahead and plan for that rainy day much before it actually arrives. And when it does, you have the security boat made up of your savings that will help you ride out the storm.
So, as much as we’d love to live in the moment, always remember the thumb rule, 20 per cent of what you earn should be earmarked for your future. That’s one of the biggest financial mistakes most people. The other one is not knowing where to keep an emergency fund in Singapore.
In fact, we’ve compiled a list of the top five financial mistakes people that cost them in the long run. Take a look and do ask yourself if you are making any of these mistakes.
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1. Not Planning Ahead
It’s nice to be spontaneous and impulsive at times, but not everything can be put off till tomorrow. If you and your spouse want to have another child in a few years, start putting aside money as soon as possible.
If you know the family car needs to be replaced within the next decade, commit to an achievable savings goal with a reasonable budget in mind.
This goes the same for non-essentials like a family holiday. Want to take the kids to see the Pyramids of Giza? Instead of booking a holiday impulsively, implement a savings plan and stick to it.
As long as you and your spouse have a steady income, there’s no reason for not setting aside money for future needs.
2. Not Being Prepared For The Unexpected
Besides a normal savings account, families should also put aside money for emergency situations. It’s best not to rely solely on a credit card to pay for emergency needs whether it’s a sudden retrenchment or a medical issue that needs immediate attention.
Your best bet would be trying to build up an emergency fund that amounts to about six months or 12 months of your average pay. Start slow and commit to putting aside a minimum amount of money each month to ensure steady growth.
Do remember, your emergency fund should comprise your basic necessities and not your wants or desires. This will only make your emergency fund more difficult to achieve in a short period. At the same time, ensure you invest this money in a space where it’s easy to withdraw at a short notice period.
3. Keeping Secrets
Building wealth is a lot about teamwork in a family. That’s why be financially open with your spouse. Understand that if a situation occurs in which you are incapable of dealing with your debt, your spouse and family will have to bear the consequence.
Don’t keep them in the dark about money problems. It will put a definite strain on your marriage. Be sure to consult them before taking out any major bank loans or entering any financial investments.
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4. “Stealing” from your own cookie jar
It’s completely understandable that you may want to reward your family during a good financial period. You and your partner have been consistent with your savings, and both of you have worked hard to keep purse strings tight.
However, taking out money from emergency funds or savings accounts can be a slippery slope. Instead, commit 5 per cent to 10 per cent of your salary to a “fun fund” that can be collated and used every six months to treat the family to something special.
Do remember, you don’t have to spend thousands of dollars to have enjoyable quality time with your family. Pick and choose your “fun” so you have enough saved for a situation as bad as the pandemic.
5. Not Making Use Of Technology To Save
In this day and age, technology helps us to do a great number of amazing things to make our lives easier and less complicated.
One of those things is an automated savings transfer. So, yes, not utilising this facilitiy is one of the top financial mistakes you may be making right now.
Instead of manually transferring money from your account into your separate savings accounts, just activate an automatic bank transfer at the most comfortable time of the month.
Besides saving yourself the time and the hassle, you’ll notice that your savings seem to grow a lot faster.
Also! We are currently running a giveaway on 6 months’ worth of diapers for 10 lucky winners! Don’t miss out on saving money!
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