Most people think saving money is painful. Although you know why you should allot a portion of your income to current account or savings account deposits, it’s always a struggle not to spend your disposable income. There are many ways and methods you can employ to make the process easier for you, from keeping a spending diary and making a very strict weekly budget to getting a savings account with required monthly deposits. These methods can help a lot.
Yet for some people, it has to be more direct. A spending diary can help you keep track of your spending, but that’s basically it. A budget gives you an idea on how much you should spend, but it doesn’t stop you from spending. Luckily, there are certain ways that can help you save money in a more proactive way.
The piggy bank method of saving
As a kid, you may have had a piggy bank. Owning a piggy bank, or a coin jar, is still an effective way to save money, even if you’re already an adult. Make it a habit to put your extra coins on the jar every day. Every now and then, put some bills too. How much you put everyday is entirely up to you. You can set a specific amount every day or you can just go with how much coins you have for that given day. However, make sure it’s a jar or container you couldn’t open easily so you wouldn’t be tempted to check your savings. Open the jar only when it’s full and deposit it into your savings account or current account, or whatever bank account you have that offers the most competitive interest rates.
The current account-savings account connection
If you have savings accounts and account accounts from the same bank, consider linking them up and avail of a standing order.
Set the standing order so a part of your deposits for the current account goes immediately into your savings account. For instance, your salary goes into your current account. Set an order so your bank will transfer 100 dollars from your current account to your savings account every month. You wouldn’t even see the money since it’ll go directly to another account.
This helps since you won’t see the money on your current account, and you won’t feel tempted to spend it. You can do this technique if you want to set aside a specific amount of money every month for your savings account deposits, especially if you can’t trust yourself to do the savings deposits.
A similar method that can be employed on your current accounts and savings accounts, it is called sweeping. You set your current account to transfer money to your savings account at a specified date. This way, whatever money remaining on your current account will become your savings deposit. This only works if you do not have to keep a specific amount of money on your current account. The rationale for “sweeping” is that you don’t have a current account to accumulate money for savings and interests anyway. So you have it for convenient access to your money. This works because it allows you to have deposits on your savings account automatically.
You have to take note of the specifications of this sweep. Make sure the bank does not “sweep” funds into your savings account when you do not have any funds on your current account, which is possible because of overdrafts. Normally, banks do not sweep in this kind of situation, but you have to make sure nonetheless.
This raises the question: is it wise to transact all your financial needs in one bank? As long as you’re not on the red, it is.
Consider opening special bank accounts that offer high interest rates. A fixed deposit bank account or a time deposit bank account, as it is called elsewhere, offers rates way above the bank standards, although it limits to your access to your funds. If your intention is to save as much money as possible, a fixed deposit account is perhaps the most viable option for you. You wouldn’t be able to withdraw your money until after a specific maturity date, which usually lasts for a couple of years.
A foreign currency savings account might also be a good idea, although this involves certain risks. Foreign exchange movement is unpredictable, so you can stand to lose money in an American dollar bank account, although you can also earn money from it as well.
Take advantage of bank accounts that offer incentives for saving. This kind of bank account may be difficult to find in Singapore but they do exist. For instance, some banks give you monetary or non-monetary rewards for depositing a specific amount of money into your current account. Others provide discounts and bonus “sweeps” when you use debit cards, which is connected to the current account.
Find banks that provide you with additional value for the service you are getting. If you’re getting a discount on your bank fees for depositing a specific amount of money into your current or savings account, that means you’re getting more than your money’s worth.
Assessing your accounts
Another way of building up your savings is by assessing the specifications of your bank accounts. This method isn’t exactly easy, but it is necessary.
Check how much money you’re making from your bank account and how much you’re paying to keep the account. You can also compare interest rates from other banks. The point of doing this is to figure out if your money is working as hard as it should, and if you can explore other options for saving.