5 ways how young people can save more money

Living in the current generation encompasses many temptations. The temptation to keep up with trends, the need for active social life and the ego and pride to not lose out. Some people describe the current generation Y and Z as 月光族. If we divide the words up, 月 means month. 光 indicates nothingness or emptiness. 族 means the generation. All together, the three words is used to describe people who are living paycheck to paycheck. Their expenses equal or exceed their monthly income. They have nothing left over at the end of the month.

Living as a young person in Singapore, i can understand the pressures to keep up with the standards of society. Young people like to dress nicely, own the latest gadgets, buy branded goods to impress friends and so on. It is no wonder most people can't save any money by the month end. I did had a discussion with my friends on how we can save more money. We joked about if we really want to save money, then we should just stay at home and maybe play computer games. Stay at home = no money spend. In this way, we can save a lot of money. Well, by now, most young people will start to think this is absolute no life. We call it the anti social life. No one wants to be labelled as anti social. End up will be without friends and feel lonely. This is not what we want.

So how can young people save money without compromising their social life? The truth is, there will be some sacrifices involved. But well, you can choose to enjoy now and suffer later or you can choose to sacrifice now and enjoy later. It's your choice. But i guarantee that you will not end up in the extreme of being anti social. There are 5 ways which i will share below:



1) Pay yourself first
This is what most financial planners and advisers will tell you. It is not new to many people. But how many people really understand the true meaning of this phrase? Paying yourself first means setting aside a fix amount of money even before you start spending. Will this compromise your social life? The answer is no. Let me explain.

Think about how much did you earn when you started working? Maybe just slightly above $1000 per month working part time. Think about how much did you have as allowance when you were a student? Maybe just a few hundred dollars per month. Did you still live through life and still have friends? Yes you did. When we start to grow up and earn more money, unknowingly we start to spend more also. We buy more things and dine at more expensive places. Our usual cheap hangout places become more and more high class as our income increases. When we're young, we hope to have more money thinking that we would be more happy being able to buy the things we like. But sadly, this is not true. We will come to realise that spending money will only make us happy for that instance. It doesn't last long. The new thing that we bought starts to lose it attraction very soon. We get into the cycle of always wanting to have new things to make us happy.

So, try paying yourself first. Set aside a fix amount to save once you get your paycheck. You can start by saving just 10% of your income. Watch your savings account grow every month. This could make you more happy than spending money.



2) Track your expenses
You need to know where you spend your money in order to find out why you can't afford to save every month. Record down your big and small expenses. This include how much you spend on food everyday, what are the things you buy and also how much you spend on transportation. You can track your expenses using a smart phone app. I personally use "expense manager" on my Samsung phone. The app icon is blue in colour. After one month of recording, you'll know what are your biggest expenses. You'll be shocked at where you spend your money. Start tracking now and be in awe of yourself! You can only resolve a problem if you see the problem. Tracking your expenses will open your eyes to the problem.

3) Have a budget plan
Have a plan. This is as simple as that. There is a famous quote that says: "If you fail to plan, you plan to fail". After tracking your expenses, you can work out how much you need for your expenses every month. Cut down unnecessary expenses and live below your means. You may start to think hey, that's not the life i want. Why do i have to restrict my enjoyment of life? But do hear me out. I believe firmly that if you want to have a more enjoyable life, then you have to to try to earn more money. Yes, increase your income so you can spend more but at the same time still be able to save money. You are still living below your means but having a much better life. Go get a degree if you haven't got one. In Singapore, certification is important and almost guarantees you a higher pay. Go learn new skills to create more income. Learn how to invest wisely and receive dividends from stocks. Learn how to start a part time business. Learn how to communicate more effectively and expand your network in your workplace so you can get promoted or get higher bonus.

Work out the amount you can save every month. Have a long term savings plan if you can. How much do you want to save in 2, 5, 10 and 20 years time? List it down and have savings goals. This is also part of planning for retirement. If you can't meet your target, you can review it and know the problem immediately. Remember, if you fail to plan, you plan to fail.

4) Know the reason and purpose for savings
By now, you would have felt that saving money is really hard. Why do i have to do this? Is it even worth the effort? This is what happens to most young people. They give up and end up not saving money because they are not able to persuade themselves into it. They will say: "Life is too short, why worry about not enough money when i'm older. I may just die any time so why not enjoy now?". Or they may also say:" I work so hard for my money. I should pamper myself for working so hard". Does it sound like you? If it does, then you need to change the way you think.

Have a reason for saving. Without a reason and a purpose, you will find it very hard to save money. This is the same as losing weight. Why would people want to lose weight? Because they want to regain confidence and look good and healthy. So why would you want to save? It may be for retirement or for your future house or family. One of the most important reasons is because you need that savings in case of emergency. If you lose your job, you definitely need that to tide you through that period. A guide is to have at least 6-9 months of your expenses set aside as emergency fund. So in essence, this is saving for rainy days which the older generation will tell us young people to do.



5) Make savings a habit 
There are good and bad habits. Saving money is one of the good habits that young people can develop. A lot of people say saving money has to start from young. Once its a habit, then the child will not find it difficult when he or she grows up. So parents should teach their children on the importance of saving money.

But what if you've already grown up and your parents did not teach you how to save money when you are young? You spend a lot and find it very difficult to save. It has sort of become a bad habit to spend more than you earn. But here's the good news. Habits can be developed at whatever age you are. You just need to start somewhere and do it month after month. After awhile, you'll realise that the good habit of saving money has developed.

Start by paying yourself first. Open a separate savings account and transfer a fix amount of money into that account once you get your salary. You can do this automatically by setting up a standing instruction using internet banking. I use a POSB account for my daily expenses and i transfer a fix amount automatically to my other accounts every month on my pay day. This service is provided free of charge. I have an emergency fund account, an investment account and a separate spending account that i use for big expenses (this account i use a card to pay for my expenses which gives me cash rebates). I only keep a minimum amount in my POSB account which i can draw out from the ATM for daily expenses.



Start today!!
With technology and services by internet banking, saving money is not so much of a hassle any more. Just take the first step and the rest will be automatic. Track your expenses and have a budget plan to reinforce your savings habit. Ultimately, humans need to see in order to believe. Writing your plan down creates a vision for your future and whatever your brain can see, it will also try to achieve. I wish you all the best in your journey towards creating a better future.

"Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like." ~Will Smith 

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