One of the most important things when dealing with money is making sure you’re completely aware of how much is going in and out of your pocket at all times.
No one likes thinking they have a few extra dollars in their accounts just to check their bank balance and realise they have way less than expected.
“Where did all that money go?” is an unfortunate statement many of us would have uttered at least once in our lives.
The mystery of the missing salary you made just last week.
While we’d like to blame tiny money gnomes for our empty bank accounts; the truth is, most of the time, our spending habits are often the culprit.
So how do you make sure that you become more responsible with the money you earn?
Create a budget
If you fail to plan, you plan to fail. Harsh but it’s the cold hard truth.
That’s why having a budget can be a helpful way to visualise and understand where your money goes every month.
There are many formulas or rubrics available that you can use as a guide – a commonly used budget allocation is the 40 | 30 | 20 | 10 rule.
The rule states that 40% of your income goes to expenses, 30% to mortgage/rent, 20% to savings, and 10% to insurance.
To add on, that’s 40% maximum, 30% maximum, 20% minimum, and 10% maximum.
This means if you’re spending only 20% on mortgage payments, it doesn’t give you an excuse to spend 50% on expenses. That extra 10% goes straight to savings.
This will help you stay disciplined, and help you build wealth in the long term methodically and consistently!
Pay yourself first
This can truly make or break your saving habit.
Paying yourself first is the habit to put money aside the moment you receive your salary into a separate savings account before you start spending your money and paying your bills.
This way, you’ve saved immediately and can’t make up excuses on not having enough to save at the end of the month.
Save first and spend the balance.
In fact, you can add on a ‘Reset to Zero’ rule which makes sure that if you have a positive balance in your spending account, you immediately transfer that to your savings account and restart the month at zero before the next salary comes in.
Over time you’ll realise that you may be able to save even more than expected.
Build an emergency fund
Probably the most important thing today may just be the idea of building an emergency fund.
In the event that you unfortunately lose employment, fall ill, have to repair your car or laptop, or send your pet to a vet, this is money that will be there to take care of all those things whether big or small.
Many recommend that you should hold at least 3 to 6 months of expenses just for emergencies. So if you spend $2,000 a month, that’s $6,000 to $12,000 set aside in your emergency expense account.
Start investing (even if it’s a small sum)
Now that you’ve set aside some money in an emergency fund, you might want to step it up and get started on actually growing your money.
The one way to start building wealth, is to start investing. Putting money aside to invest in financial assets may allow you to earn a higher expected return than idle money in the bank.
But investing can feel daunting, therefore we believe in building a habit and starting with lower-risk instruments to get your feet wet.
You don’t have to dive into the deep end with stocks and index mutual funds.
This is why we’ve introduced…
AutoInvest: a micro-investing tool
AutoInvest is the perfect way to start building a healthy financial habit of investing.
It allows you to invest from your GrabPay Wallet starting from $1 every time you use Grab. You can decide on the transfer amount and it’ll automatically invest when you: Take a Grab Ride, Order GrabFood, Shop with GrabMart, Pay in-store and online with your GrabPay Wallet or GrabPay Card (do note that no money will be invested for transactions made using Cash, PayLater or Corporate Postpaid payments).
By incorporating investing into your day-to-day activities, AutoInvest gets you started small and soon, it’ll start to add up fairly quickly.
Partnering best in-class asset managers UOB Asset Management and Fullerton Fund Management, AutoInvest allows you to invest in a stable portfolio to earn estimated returns of 1.8% p.a. after all fees without any hidden costs (returns are not guaranteed or protected).
It also remains liquid with no lock-in period and is stable with low volatility.
Ready to get started and build a strong financial foundation by investing?
Check out AutoInvest via the Grab app here.