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How Saving $2,000 Monthly Can Transform Your Finances – And Your Future

Singapore topped the rank as the world’s most expensive cities in 2022, and financial security is a concern. However as most would advise, starting early is crucial and can be a powerful strategy in pushing you closer to your financial goals. 

If we can help it, we all want to save a bit more money! But how much should you really set aside from your monthly paychecks? Is it beneficial to save $2,000 every month, for example? Yes, saving $2,000 per month is fantastic! It amounts to $24,000 per year, and if properly invested, it will grow into a sizable portfolio over time. In this article, we will explore how saving $2,000 monthly can transform your finances in Singapore.

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Seedly’s calculation on how much we could aim to save

The Power of Saving

Saving money is one of the most important financial habits you can develop. It allows you to build a safety net for emergencies, plan for your future, and achieve your financial goals. By saving $2,000 monthly, you can make significant progress towards achieving financial security.

Power of Savings

How to Save $2,000 Monthly

Saving $2,000 monthly may seem like a daunting task, but it is achievable with the right mindset and strategies. Here are three ways to save $2,000 monthly:

1. Budgeting

Oftentimes when our paycheck comes in, we start spending unconsciously without keeping track of what and where we spend it. Knowing where your money is going will help you to review your finances more effectively, allowing for a budget plan that best suits your lifestyle and financial goals. 

A great starting point is to utilise the insights provided by most mobile banking apps such as DBS and OCBC where it provides a summary of your spending habits. For example, what you spent most on (e.g., dining, transportation, shopping), where you spent most (e.g., BUS/MRT, Grab), and how many months your emergency funds can last for.

After reviewing your spending, you can now try a budgeting plan that works for you such as Envelope Budgeting or the 50/30/20 budgeting rule. Do remember to review your budget and modify along the way.

2. Cutting Expenses

Reducing your expenses is another way to save money. Look for ways to reduce your fixed and variable expenses, such as rent, groceries, utilities, transport and entertainment. You can also cut back on unnecessary expenses like dining out or buying expensive clothes. 

Getting to your destination via public transport can save you a large sum of money especially if you’re one to frequently take taxis. Let’s say getting to your workplace in the morning costs you $3.50 by public transport and $15 by cab (peak hour fares might even be higher!)

Scenario 1:

5 days of public transport: $3.50 x 5 days = $24.50

Not including weekends and other outings, in a month, your transportation would come up to about $98

Scenario 2:

3 days of public transport & 2 days of taxi: ($3.50×3) + ($15×2) = $40.50

Likewise, just based on transport for work, in a month, this totals up to about $162

While it may not seem like much, the above breakdown is just an estimate and a difference of $64 definitely adds up. If you absolutely have to take a taxi, try carpooling such as Grab Hitch, RydePOOL or RydeFLASH which usually costs less. Here are some other ways you can reduce your transportation costs in Singapore.

3. Increasing Income

There is a growing trend among millennials that suggests a job should be solely focused on fulfilling one’s passion, and that money should not be a motivating factor. Some even view the consideration of financial benefits as selfish and entitled.

This mentality is a recent development, as previous generations viewed a job as a means of exchanging labor for money and meeting financial obligations. Our parents, for instance, may not have prioritized passion in their work, but instead prioritized providing for their families. Nevertheless, this did not make them any less hardworking or successful. It is important to pursue one’s passion, but it is also legitimate to work for the sake of earning a living.

In my view, my day job is a crucial investment of my time, which is an irreplaceable asset. I am dedicating my time to secure a steady income now and in the future, and I see this as a valuable and necessary investment.

Increasing your income is one of the most important steps you can take to transform your finances and achieve your financial goals. It is the quickest way to increase your savings drastically without changing your lifestyle as much compared to the other options.

While it may seem challenging, there are many strategies you can use to boost your income and earn more money. You can consider taking on a side hustle, asking for a raise, or finding a higher-paying job. By increasing your income, you can have more money to save and invest. Therefore, I strongly believe that your day job is the biggest investment of all.

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How to Increase Income: 11 Creative Ways for 2023

Read more: 10 Side Hustles to Start in Singapore for Extra Income

Benefits of Saving $2,000 Monthly

Saving $2,000 monthly can provide many benefits for your financial well-being. Here are three key benefits of saving $2,000 monthly:

1. Building an Emergency Fund

Having an emergency fund can give you peace of mind and protect you from financial setbacks especially during unexpected expenses or a job loss. Saving $2k a month enables you to build a sizable emergency fund quickly that can cover about three to six months of living expenses. Find out how to get started on building an emergency fund.

2. Financial Security – Buying a house

Saving $2,000 monthly can also help you achieve financial security. You can use your savings to pay off debt, save for a down payment on a house, or invest for your retirement. 

Singapore’s housing affordability was categorized as severely unaffordable in 2021 and while there are subsidies and grants available, not all are eligible. Saving early to buy a home in Singapore has several benefits that could help you in the long run. By saving early and accumulating a sizable down payment, you can secure a lower interest rate on your mortgage. This helps you save money in the long term due to the lower amount of interest you have to pay over the life of the loan. As home prices are increasing over time, owning a home gives you a hedge over inflation by providing a means of protection against the rising cost of living and helps you maintain your purchasing power over time.

3. Wealth Accumulation

Through consistent saving, you can build a solid foundation and accumulate your wealth for future investments and goals. One example is setting up a business which requires enough capital for purchasing equipment, building an inventory and not forgetting marketing spend. Having a substantial amount of wealth also gives you a peace of mind, greater financial freedom for travelling, leisure activities and allows you to achieve longer-term financial goals such as early retirement.

Saving $2000 each month may seem unattainable but with proper planning and the right approach you can find ways to cut expenses without sacrificing your quality of life. 

Overcoming Challenges

Saving $2,000 monthly is not easy, and there are many challenges you may face along the way. Here are three tips to help you overcome these challenges:

1. Changing Habits

Saving money requires discipline and changing your spending habits. You may need to say no to some expenses, such as dining out or buying new clothes, to reach your savings goal. By creating a budget and sticking to it, you can develop new habits and achieve your financial goals.

2. Resisting Temptations

It’s easy to fall into the trap of instant gratification and impulse purchases. To resist temptations, try waiting 24 hours before making a purchase. This can help you avoid impulse buys and only spend money on things that are truly important to you.

3. Staying Motivated

Saving money can be a long and challenging journey. To stay motivated, celebrate your progress along the way and visualize your long-term goals. By keeping your eye on the prize and staying committed to your savings goal, you can achieve financial success.

Transform Your Finances and Your Future

To avoid overwhelming yourself, it’s important to plan and set milestones to achieve your financial goals. For instance, if you save $2,000 per month for 5 months, you will have saved $10,000, not including any interest you may earn through savings accounts such as the UOB One Account. Over the course of a year, you could save $24,000 without considering earned interest. Starting early is crucial, regardless of whether you’re saving $1,000 or $2,000 each month. By budgeting, reducing expenses, and increasing your income, you can save a significant amount of money on a monthly basis. Diversifying your portfolio and investing your savings can help grow your wealth over time. With persistence and discipline, you can attain financial security and enjoy a comfortable retirement.

Disclaimer: Please note that I am not a licensed financial advisor and the information provided on this page is for educational purposes only. It is important to consult with a professional financial advisor before making any financial decisions.

FAQs

1. How long will it take to save $2,000 monthly?

It depends on your income, expenses, and savings rate. With discipline and persistence, it is possible to save $2,000 monthly within a few years.

2. Can I save $2,000 monthly if I have debt?

Yes, it’s possible to save $2,000 monthly even if you have debt. However, you may need to prioritize paying off high-interest debt before saving.

3. What if my income is not enough to save $2,000 monthly?

If your income is not enough, consider finding ways to increase your income, such as taking on a side hustle or finding a higher-paying job. You can also look for ways to cut expenses and reduce your debt.

4. How can I track my progress towards saving $2,000 monthly?

You can track your progress by setting up a budget, tracking your expenses, and regularly checking your savings account balance. This can help you stay on track and make adjustments as needed.

Eugene Chai

Eugene Chai is a seasoned financial expert with over 4 years of experience. His work has graced the pages of prominent Singapore Investment sites. He has also been featured on Channel News Asia - Money Talks. With a passion for simplifying complex financial concepts, he empowers individuals to make informed decisions about their money. Whether it's investment strategies, personal finance, or market trends, Eugene's insights are a beacon of clarity in the world of finance.

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