3 Tips To Save Money In 2021

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(Photo credits to olia)

We know that the economy was not bright in 2020 and 2021 is an even tougher year. You might have lost your jobs, getting pay cut or demoted because of the rising cases of Covid-19. 

Before we jump into the tips to save money, let’s set the right mindset first. Living paycheck to paycheck impulse spending and using credit cards to borrow more money are all going to help you fail the saving plan. So to survive this economic crisis, you have to find ways to reduce your expenses and start saving! 

Tips No. 1 – Set Saving Goals

Survival is the fundamental of your saving plan. However, most of the time it can’t motivate you to start. Setting a goal to the saving plan will help activate your desire to save money as well as to do it happily. Think about what you want to achieve and how to make life better. List down the short and long term goals first and then the details. Remember to use SMART (Specific, Measurable, Attainable, Realistic, Timely) mechanism when you do that so you will have a clear picture. 

Examples of short term (1 to 3 years) goals are: 

  • I want to start an online boutique with my brand selling handmade and organic soap in 3 years.
  • I want to visit Mexico with my wife for 5 days 4 nights in 2024 during Christmas, enjoying our favourite burrito.
  • I want to buy a Toyota Vellfire to bring 6 of my family members on a road trip in 2 years.

Examples of long term (4 years and above) goals are:

  • I want to build my own 3 bedrooms, landed house on Aur Island in 7 years
  • I want to work only 3 days a week and have a passive income of RM 3,000 a month by the age of 35
  • I want to financially support my son’s Master of Science at the University of Wollongong, Australia in 5 years

The next step is to figure out how much money you need to achieve these goals. Working towards the goals could be hard but “no pain, no gain” right? You can start with setting 1 short term goal and achieving it can give you a psychological boost that it is worth the effort.

Tips No. 2 – Cut Your Spending

When you know the amount you need to achieve the goals you have set, now is how to save it. You can first have a list of all expenses. It might take a while if you have never done this list before as there are fixed, periodic and variable expenses. Fixed expenses are basic expenses that you are paying every month such as transportation rent. Periodic expenses are similar to fixed expenses but less frequent and monthly amounts may vary, including your car maintenance. Whereas variable expenses are divided into necessary and discretionary. Necessary variable expenses are like the fuel for your car and food budget, whilst discretionary variable expenses are for recreational spendings, such as buying an additional bottle of perfume or a shirt.  

Secondly, go through every item on your expenses list and determine which can be cut. Food, rent, transportation to work and daily essentials are the must-haves in your life. You certainly can’t cut them out but you can try to reduce them. For example, you can go for a more economic food option like hawker stall (RM10) instead of a chain restaurant (RM 20). Reducing a few ringgits from a meal is significant. Besides, spending moderately is a good habit for long term benefits. The non-necessity expenses such as movie and music subscriptions, you can get friends or family to share the accounts. Cancel those subscriptions that you don’t use or are less active.  

In summary, the basic rule is to cut your “wants” and reduce your “needs”. 

Tips No. 3 – Maximize The Value Of Your Money

Once you have done reducing your monthly expenses, you can move on to the next tips – maximize the value of your money. You might be wondering, “RM 1 is RM 1, how do I increase the value of my RM1?” Well, there are many ways to achieve that. Becoming a member for free is the most common method. As a member, you get benefits like collecting points and rebates. Bonuslink is one of the oldest consumer rewards programmes. You can redeem gifts from the points accumulated. To a newer system – reward credit cards such as travel miles and cashback are being widely utilised. In recent years, e-wallet has become popular and it is a better option for contactless payment. Using e-wallet such as Grab Pay, Touch n’ Go and Boost help you collect points, get cashback as well as buying at a discounted rate.