Young & Savvy: Having a savings plan can help you cross life’s milestones easier

SINGAPORE – Although we had budgeted about $60,000 for our home renovation, speaking to various contractors made my husband and I realise that our budget would quickly rise to $80,000.

The factors that drove up our renovation costs include soundproofing the master bedroom, as my husband is sensitive to loud noises, and installing window grilles that are safe for cats that we plan to adopt.

The biggest expenses for most people often occur shortly after they enter the workforce. This is especially so for young couples who are starting their lives together.

In the Singapore context, we all know too well that when this major life milestone takes place, many young couples end up spending the bulk of their savings on their new homes, renovation costs and, yes, wedding expenses.

As someone who has been in the workforce and earning a full-time salary for not more than five years, I was initially very worried about how I would afford all these things.

Over the past year, my husband and I came up with a plan to work towards paying for these milestones. Firstly, we set aside a fixed amount of about $2,500 every month for upcoming expenses, and this sum goes into the joint bank account that we opened to save for big expenses.

Some people might prefer saving what’s left of their salary at the end of the month, but I’ve found that saving at the start of the month works better for me.

Each month, my husband and I also discuss our investments, CPF contributions and bank balances. These numbers are all laid out neatly in an Excel spreadsheet, thanks to my partner, who loves planning and organisation. The spreadsheet shows us how much we have as a couple.

While such sessions do not have to be monthly, scheduling a “finance date” now and then is a good way for couples to keep their savings and investments on track.

It is prudent to look ahead because there is nothing worse than being hit with an unexpected increase in essential expenses that you have no money to pay for. A case in point is the possible 30 per cent jump in our home renovation costs.

My first reaction to big upcoming expenses used to be: “How can I possibly afford that?”

By laying out my finances clearly – seeing all the numbers in black and white – I now have more confidence in planning so that I can meet my financial milestones.

During our monthly session, we also talk about our upcoming milestones and decide the budget for each one. This allows us to start saving for each milestone early and even leave some room for us to revise the budget, such as by reducing non-essential spending if necessary.

Understanding your priorities can also help you save some money – it’s not financially possible to have the best of everything and it’s about making the best use of what we have.

So singling out what’s most important to you can ensure that your hard-earned money is spent on things that matter to you.

For example, we decided that being able to house our cats safely and having a quiet master bedroom to sleep in every night would be more important than having fancy tiling for our home.

As we plan to live in our first home for many years, it makes more sense to ensure that we spend a bit more on quality fixtures that will last longer.

I also set aside money for our emergency fund every month, which has about three to six months’ worth of our average monthly expenses. This is in case of job losses or sudden spikes in medical expenses.

Let me share a useful shopping tip which I have personally found to be very effective in not only helping me save more every month, but also makes it less painful to cut down on expenses.

It starts with changing your mindset when it comes to spending on things that you probably like but are not crucial to your day-to-day use.

So before I make the decision to buy, I tell myself that I will delay the purchase by one week and see if I still want the item then.

Just by going through this mental exercise, I have successfully resisted many non-essential purchases. Indeed, I have found it more fulfilling that I have succeeded in saving more each month, simply by not giving in to impulse shopping.

I’ve also dialled back on agreeing to too many overseas trips with friends, as even short weekend getaways can quickly add to expenses.

While it’s important to save up for life’s big milestones, I’ve made it a point not to compromise on the enjoyment part of life. After all, what’s life without bubble tea a couple of times a week and spending money on things that make me happy, like cute K-pop merchandise.

Saving up for big expenses can be tiring, but it’s also satisfying to see my efforts come to fruition – being able to afford what is truly important to me. I hope my future cats will enjoy their new home as much as we do.