2017 is coming to an end. It’s the time of the year to check if we hit our saving target for the year and to plan a new one for 2018. There are many different level of saving. I have given some random name to them to make it a little more interesting. I am currently at the SHIOK stage which is the maximum I can go due to commitment. This post will be a short one on how someone can progress through the stages base on my experience. I will only be covering until MISER stage because after that I have no experience yet. This article is only applicable to those who spend unnecessarily. Saving are inclusive of bonus and excluding CPF contribution. For example your annual income is $50,000 including bonus and after CPF deduction you are left with $40,000. You are saving $10,000 for the year, you will fall under MISER category.
|Debtor||Saving rate below 0%|
|Rat||Saving rate between 0%-10%|
|Average Joe||Saving rate between 11%-20%|
|Miser||Saving rate between 21%-50%|
|Shiok||Saving rate between 51%-80%|
|Happiness||Saving rate between 81%-99%|
|Freedom||Saving rate 100%|
Debtor is someone who spends on wants using future money.
- Cut all your credit card. There is no need for credit card for those who are always in debt. The card benefit is of no use to you because you simply cannot control your spending habit.
- Spend 50% of salary to clear your debt.
- Transfer 10% of salary to a newly created account with no ATM/passbook.
- Go visit the supermarket and buy some instant food such as biscuit or noodle once you salary is in.
- Keep only 1 ATM card for withdrawal. Always use cash. What happen if you still can’t control yourself and you run out of cash? Eat the instant food that you buy in advance and make sure you last till the next payday.
Rat is someone who lives pay check to pay check. They have self-discipline and will not spend beyond their means but have little or no savings. They tend to spend more on the first week after payday and by the fourth week they will be leading miserable lives.
- Track you expenses for at least 3 month. If tracking it every day is too troublesome for you, track only the fourth week or the week prior to payday when you feel like you are living in hell.
- Calculate out how much you spend on average during that hell week.
- Add 50% to that figure. For example you spend $100 for that hell week, add $50 to that number.
- Adopt the envelope budgeting system by setting up GIRO that will transfer $150 to your spending account every week. If you can survive $100 during hell week, $150 will definitely be more enjoyable. Of course you can also use real envelope if you prefer it over GIRO.
- AVERAGE JOE
Average Joe is someone who follows the crowd and tends to spend before they save.
- Start small by eliminating unnecessary spending. For example cutting down on dining in restaurants or taking private car. If you tend to dine in restaurant 5 times a week, cut it to 2-3 times.
- Before you buy anything, always remind yourself that not everything your colleagues or friends have, you will need to have it. Most of the time it will be useless to you and it’s your wants.
- Save before spending. On top of your usual saving, add 1% every month until you reaches your limit. For example you save 15% this month, next month you save 16% instead and so on.
Miser is someone who is not bothered about what others have and will not follow the crowd blindly therefore others will see them as a miser. They do not have much wants hence able to save up the money. However, there will be a few things which might not cost much that they are unable to resist depending on individual. The most common example will be ice cream, chocolates and for me is bubble tea. Although it doesn’t cost much, if it is consume once every 2 days, it will be a substantial amount. I only have 1 suggestion to counter this which I am still doing.
- Every time when you walk towards your cravings, look at it, look at the price, turn around and walk away while laughing in your heart saying you did it.
Okay I know you will be saying I am crazy at this point but everything is just in the mind. You just need to start doing it and resisting it. After a while you will get used to it. I started from drinking bubble tea every day to drinking it 2 times a week now. Reducing it not only allows me to save up more money, it also reduces the amount of sugar I consume. Win win situation.