Understand The Importance of Savings

Life has evolved into a constant battle of survival. So, how do we strike a balance between work and life but yet have the means to face tomorrow?

Saving up way ahead for that survival will help to determine how well we cope with the surge of challenges that may come our way. We’d never know what will happen tomorrow, so it’s really important that we plan ahead and get ourselves prepared the best we can to weather the “unexpected” in life.

Here are some tips on what you can do to help you gear up for what lies ahead:

	Back to Basics – Plan how much you need to save each month, Calculate how much you’ll need to retire, Action: execute your plans & Reassess progress of your plan along with your financial goals every year.
	Employer Provident Fund (EPF) – It would be good if you can get your hands on your latest EPF statement. This can be a very useful tool when assisting you in your financial planning; especially in setting your financial goals and form a great platform for your annual evaluation.
	Expenses Tracking – Record every spending of every item that you purchased.  Use a notebook or an Excel spreadsheet to track. Always request for receipts as reference. By the end of 3 months, study your spending pattern each month. From here, you should have a better idea of where to trim so you can save more money.
	Stretch Your Investments – Maintain the consistency when allocating a sum of money for savings. Treat it as part of your fixed expenses. Watch your investments grow as you reap benefits from higher interest rates in Fixed Deposit Accounts or return on investments in your Unit Trust Accounts.
	Avoid Plastic Money – Don’t spend what you have yet to earn. That’s what you do when you utilize your credit cards to pay for items purchased. Let’s not forget that you have to pay for the hefty 18% interest charged monthly. If you have to use your credit cards, be sure to use them wisely. Else, you could end up in serious debts!
	Rainy Days – Our parents are right about the importance of saving up for rainy days. Ideally, you should allocate at least 6 months of your basic living expenses for your rainy days fund. If you’re able to fulfill this faithfully, you’ll be in a better position to handle any emergencies that may involve huge funding.
	Realistic Goals – Set realistic goals for yourself. Plan ahead on your own and your family’s future. Eg. You want to retire by age 40? Send your kids overseas for the best University education? Prioritize your goals and number of years you have to achieve that goal.
	Set Terms – There are 3 basic categories of goal setting:  Short-Term Goals for items you wish to buy within 1-2 years’ time. Eg. Paying off your credit card debt or a vacation to Bali. A basic Savings Account may be suitable as it provides short term benefit and security. Mid-Term Goals caters for goals that need to be met within 5-10 years’ time. Eg. Buying a new home or MPV. Fixed Deposit (FD) Accounts and investments in Unit Trusts are a good start to yield a higher return rate with moderate risk involved. Long-Term Goals are usually the ultimate targets of what you hope to achieve beyond 10 years’ time. Eg. A comfortable retirement or saving up for your toddler’s education fund. Stocks and mutual funds cater for this objective best as they offer potential higher rate of return but with higher risks as well.