When was the first time your parents ever advised you to start saving? It could be as simple as putting the money we received during special holidays into our bank account or only spending half of our savings to buy toys. The more we save, the more we can spend, right? When we were kids, saving has taught us the value of money and how it can help us in tough times. Similarly, when you want to start saving for retirement, it is encouraged to start early. How much can you save if you start saving from a later age, realistically speaking?
You need to start saving as soon as you can, preferably the minute you get your first job. Because the earlier you start, the more you can save. Imagine saving $100 every month starting in your 20s compared to saving $100 every month starting in your 40s. Would you save more if you started saving in your 20s or the latter?
So, when is the best time to start saving? The answer is clear and simple—start saving as soon as you can. When you start saving sooner, the money has more time to grow.
1. Stick to your budget
Creating a budget helps to get your finances on track. You get to track how much money is coming in and out of your bank account each month and determine how much you will need to save to reach your financial goals.
Creating a budget may seem like a lot of work, which is why it helps to seek professional advice and look for numerous online resources that can help you. Once you have created a budget, you must stick to it. If you find yourself falling behind and unable to save as much as you would like, you need to review your budget and tweak it accordingly. However, if you lack discipline, you can share expenses with someone else to make sure that you hold each other accountable.
2. Set a retirement saving
As mentioned before, it’s better to start saving as soon as you can. Even if you plan to retire in your late 60s, it’s recommended that you start saving for retirement in your 20s. Because the earlier you start saving for the future, the more it can grow.
For Singaporeans, this means optimising CPF savings. The Ordinary Account (OA) earns at least 2.5 per cent per annum, while the Special Account (SA) gets at least 4 per cent. But if you want to do more with your CPF savings, you can also invest your savings through the CPF Investment Scheme which can be used for approved investment assets.
3. Practice good spending habits
Saving habits are taught and nurtured. If you want to practice good spending habits, you must start building good money habits while you are still young. Other than improving your financial literacy through attending financial classes, you can also practise regular checking of your bank account balances to monitor your spending and wealth accumulation.
You should also keep in mind to spend within your means whenever you’re paying using credit cards to avoid unnecessary credit card debt and high-interest charges. The best way to avoid overspending is to consider optimising your credit card.
Saving is not a complicated process if you know how to handle your finances. But if you still find it difficult to save and grow your money, you should consider getting advice and help from professional Financial Planners.
As Financial Planners, we understand how important early retirement savings is. To start saving and growing your money, get in touch with us. If you are interested in helping others make sound financial decisions and would like to become a part of our team, we’d love to talk more!