Trying to keep your finances organised when trouble strikes is part of the key to surviving and thriving in financial crisis. And an adequate contingency fund may just be what you need to survive a financial disaster.
Unfortunately, figures released by CLSA last year, point to an uncomfortable truth about the saving habits of Singaporeans. The survey revealed that almost half of households across the island are saving less than 10% of their monthly incomes, leaving them unable to cope with unexpected financial expenses.
Having no savings means living from pay cheque to pay cheque, calculating every penny spent, and leaving almost none to save, which means having nothing available for emergencies.
You will not be able to cope financially when you car breaks down, or when you dog needs to go to the vet, or when you lose your job. It’s not a fun way to live.
The issue here is not that people are saving less money. It’s that there is less money to save, which makes boosting whatever little you save crucial to your financial well-being. With interest rates low for fixed deposit, and the inflexibility to liquidate before the maturity date, we’ve found a better way for you to keep you emergency fund — plus giving it a good boost with attractive interest rate.
Here’s how you can do that:
Consolidate your spending account
Managing various bank accounts can be tedious. Most people put their contingency savings in a fixed deposit, thinking that it will reward them for being disciplined. However, the fact is — you are only going to see your money diminish in value due to the rising inflation.
According to a study conducted by Men’s Health, people save more when their money is in one place. The study found participants with access to one account spent about 10% less than participants with multiple accounts.
Here’s why: When you consolidate all your money into one account, you’re aware of exactly how much money you have. If you spend any of it, the dollar total in your head and in your account goes down, says study co-author Himanshu Mishra, Ph.D., an associate professor of marketing at Utah’s David Eccles School of Business.
This makes perfect sense. An equation with one subtraction is way simpler than adding up your money in a few accounts, and then subtracting the amount you spent. It’s math!
Save while you spend
Other than the findings, there are other pros to consolidating your savings and your spending into one account. Here’s the catch. You have to look for one that actually rewards you whenever you spend.
For example, the Standard Chartered Bonus$aver Current Account comes with a Bonus$aver World MasterCard credit and/or debit card(s). By spending S$500* with your MasterCard every calendar month, you will be earning 1.88% for the first S$25,000 in the account.
Spending S$500 a month is not impossible. In fact, most of us are already doing it. So, why not earn some interest on top of it?
* The transaction posting date(s) on the transaction on Bonus$aver World MasterCard credit and/or debit card(s) must be within each calendar month.
Watch your money snowball
Not having a large emergency fund can spell disaster. Many people have gone deep into debt because they did not have significant savings to carry them through a difficult time. How many times have you met with an emergency and have no choice but to swipe your credit card because you don’t have the cash?
Establishing an emergency fund is important. We all know that. However, it is not easy putting aside a good amount every month when we are struggling to pay our bills.
Which is why you need to look for help to fortify your emergency fund, and to help you boost whatever savings that you manage to set aside.
The bonus interest rate offered by Bonus$aver is higher than your average fixed deposit, and it doens’t even come with a lock-in period. This means you fund is highly liquid, and you won’t lose any money if you have to withdraw your cash in times of emergency.
Here’s how much you can earn with your Bonus$aver account if you keep more than S$25,000 in the account for six months:
** 1.88% bonus interest rate only applicable for the first S$25,000, when you charge a minimum of S$500 based on transaction posting date(s) to your linked Bonus$aver World MasterCard credit and/or debit card(s) each calendar month.
*** Prevailing interest is applicable for the remaining balance above the S$25,000, of your balance is lower than that amount.
Look for freebies
Sometimes in our bid to save up for emergency, we fail to reward ourselves. Or on the other side of the spectrum, we may be rewarding ourselves with the latest gadgets to the point that we fail our budget and our contingency savings.
By knowing what’s out there, and keeping up to date with the latest promotions offered by banks, we can actually save significantly.
From now to December 31, 2015, you can score yourself a free FitBit Charge worth S$199 if you deposit S$3,000 in a Bonus$aver account, or a Aztech Smart Robotic Cleaner worth S$349 if you deposit S$50,000.
If you are already saving for rainy days, why not get rewarded for it? And for your peace of mind, all deposits with Bonus$aver is protected by the Deposit Insurance Scheme which offered by the Singapore Deposit Insurance Corporation.
If this is something for you, discover more here!
Putting aside savings can be painful sometimes, but it is something that we all ought to do to protect ourselves.
It is an undeniable fact that we all need to do, and do it now. Get as much help as possible with the right saving tool, and you will see your savings grow and compound right before your eyes.
By having a substantial amount saved up will greatly reduce your dependence on the utilisation of outside funding sources, such as credit card or personal loan. If you’ve got it, save it.
For more financial tips and tricks to optimise your financial lifestyle, visit imoney.sg and learn all the best moves to make with your money.
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