Saving money is easier said than done. All people agreed that it is important to save up for the raining days but with the temptations and sales going on from time to time, many fall prey to marketing strategies and end up with unnecessary stuffs.
Many people adopted a way of saving money by setting aside a predetermined amount and stick to it. Think about it, if you were to set aside $300 once you got your salary and forgetting having that money, nothing is going to stop you from saving $3600 a year. This method is when a unpredictable situation occurred that needed money, you have it. That's the purpose of it! Raining days and you have the umbrella. The problem with it is that people tends to target these saving in blocks of success. They might need $2000 for the situation and thus rendered the balance $1600 as an extra (Well at least for me). Instead of thinking that now they already had 5 months of $300 saving and 7 more months to hit the target again, they feel that the $3600 vows has broken and $1600 has to go in order to "reset" the clock for monthly $300. Another problem with this method is the inflexibility. We all need different amount of money on different month of the year (yearly road tax, insurance, property tax,etc). Saving a fixed amount of monthly seem easier for some months and not for the others.
I save my money on a different structure. I don't set a target amount for saving be it long or short term. I just let it roll over. It started by determine what's my fixed expenditure monthly. My monthly expenditures worked out to be 25% ~ 28% of my monthly wages. Although I don't work everyday, I break up my income by days of the month. February has 29 days this year and I divided my basic salary by 29. After CPF deduction I happened to have about $190 a day. I minus 28% and balanced with $135. I farther take out another 50% and left with $67.50.
I only allowed myself to spend a maximum $67.50 a day on the month of February. I honestly don't need that much as morning breakfast cost me approximately $4, lunch $6 and dinner at home. What happened to the balance of $57.50? I simply let it roll over to the next day. I do not intentionally exhaust it and similarly I don't intentionally save it. I roll it over to the next day and to the next week. Things get easier approaching last week of the month but I do not purposely exhaust the saving on month end. If there is still balance on the last day of the month, I locked it to the saving and reset for the new month.
Of course there are determinations involved. During start of the month, I avoid looking/thinking at buying stuffs. On the end month, I loosen myself and do a bit of shopping. I always ask myself of the necessity of the product. How much I need it? How much I longed for it? How much in term of percentage does it cost compared to what I can spend? etc.
When the time comes where I need to renew my road tax, insurances... I simply goes to my total saving and pay it. I let myself plan for short holiday once every 2 months to the neighboring countries like Thailand, Vietnam, Malaysia. I simply goes to my total saving and take out $1000 and plan a 3 days 2 nights getaway.
Some might think that they don't earn as much so therefore this scheme is not for them. Well I second that. This method suit people with any salary package they are drawing and still be comfortable saving money.
I saved about $30k last year comfortably using this method. It might be $10k or even $5K for some but it's still money and it will save the day for many. I do not set a target as to why I must save money, because I doesn't want to hit that target. All I told myself is,
"I want to be able to help myself when the shit has hit the fan".
Remember: Debt free gives you Confidence and Saving gives you Freedom.
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