Want to grow your money? Setting financial goals is necessary in order to achieve a sweet retirement. I often shared my percentage of cash on hand versus my stocks investments. The comparison is only good enough for me to gauge how much cash I have on hand and not good enough to measure where I stand from my financial goal.
I believe just like me, you surely will have a financial goal in mind. The short term financial goal can be how much wealth you wish to accumulate by the end of 2020. The long term goal will be sufficient wealth for you to achieve F.I.R.E (Financial Independence, Retire Early).
I will like to share my simple plan on how to get started.
Step 1: Set A Target
Start with an achievable savings target in mind and make sure the target is higher than what you have set in the previous year. The savings target should be at least 5 figures (E.g. 20K or more).
The above chart I created shows where I am from reaching my target at 100% (Financial Goal). I am still 59% from reaching my financial goal.
Total financial assets refers to the sum of the value I have in
- Insurance savings (NTUC RevoSave and Singlife)
- Savings accounts (POSB, OCBC, CIMB)
- Singapore Savings Bonds
- Current value of my stocks
- Supplementary Retirement Scheme
I am pondering whether to include my CPF but shall leave that out for now.
Step 2: Plan A Budget
Now that you have set a target, set aside 10% to 20% of your monthly salary. This can be easily automated nowadays via Internet Banking. There are also savings account that promote this good habit such as the POSB SAYE (Save As You Earn) Account. You actually earn 2% p.a. additional interest on your monthly savings for the first two years.
What you need to do:
- Credit your monthly salary^ into a POSB/DBS account and select it as the debiting account for the monthly savings contribution into the POSB SAYE Account.
- Determine a fixed monthly savings amount from S$50 to S$3,000 (in multiples of S$10).
- Choose your preferred monthly savings date (between the 1st and 25th day of the month)*.
- Make no withdrawal from the POSB SAYE Account.
For myself, I did not sign up for the POSB SAYE Account. Instead, I stashed the money into CIMB FastSaver which offered higher interest rates (until it got slashed).
Step 3: Track Your Budget
The very last thing that you need to do track your monthly expenses. You do not want to spend more than you earn. This can be done easily via Excel spreadsheet or apps downloaded from App Store.
That is it! You will see your money grow over time if you are discipline to follow the above!