How to budget well while serving NS
A rite of passage for Singaporean males, National Service (NS) is often viewed as a period of time where they not only serve the nation but make the transition from “boys to men”. For many of them, this is likely to be the first time they receive a monthly stipend not from their parents, or a salary. This can, at times, result in excitement which can lead to the temptation of splurging during nights out and over the weekend.
However, this also provides the perfect opportunity for full-time NS men (NSFs) to learn about managing their money and it all begins with budgeting.
If you are an NSF, here are 5 key tips for you!
1. Save before you spend
Depending on your goals and lifestyle needs, try to set aside at least 10% of your monthly allowance as soon as it is credited into your bank account. By “paying yourself first”, you would have achieved your savings goal each month even before you start spending.
Your savings ratio should be one that you are comfortable with. If you are unclear of how much to start setting aside, a good gauge would be to settle on an amount that won’t require you to dip into your savings regularly to make up for your spending habits.
Another tip to consider is keeping your savings in a separate higher interest-yielding account from your spending account. This makes it easier for you to be mindful of how much money you have left to spend in the month and make your idle cash work harder.
2. Track your expenses, no matter how small
Tabulating your expenses on a monthly basis will help you find out more about your spending habits and patterns. It allows you to get a broader picture of which segments you are spending on. From there, you can get an idea of where to cut back on to increase your savings rate.
It might be hard to feel the pinch at first but small indulgences such as a cup of bubble tea every time you book out or ordering food via delivery can add up to a sizeable sum over time. However, this doesn’t mean you should feel compelled to restrain yourself from spending. You can still enjoy small indulgences as long as it is done in moderation!
You can consider reviewing your financials every quarter. This will give you an idea of how your spending patterns are like over a longer period, which will help provide a better understanding and an opportunity to figure out if you’re happy with your current spending. If your circumstances have changed, it allows you to take steps to adjust your savings and spend targets.
3. Always be prepared for an emergency
By saving diligently, you will start to realise that you can accumulate a tidy sum. If you haven’t gotten into the habit of saving before, it also gives you confidence that you’re building the right habit.
While this bodes well for you, you might feel compelled to purchase a big-ticket item as a way to treat yourself. This is all fine but spending all that money without due consideration could leave you in trouble in the event of an emergency.
This is why, before splurging on a big-ticket purchase, it helps to make sure that sufficient money is set aside for rainy days. The recommended amount for emergency funds is between 3 and 6 months of expenses but for NSFs, 3 months might be a good starting point to aim for. This is because it is generally harder to save with a smaller allowance and the focus should be on building a habit of saving.
4. Save smart
Once you start saving, you may also want to start considering a savings account with higher interest rate. For example, under POSB Save As You Serve (POSB SAYS), you can earn up to 11x more interest (0.55% per annum) on your DBS Multiplier Account. All you need to do is to credit your allowance and make retail purchases using PayLah!
As the savings grow, you may also want to start your investing journey. However, do make sure that you set aside a sum of money for your emergency fund as having money on hand ensures that you are able to handle any contingencies.
5. DBS NAV Planner
Budgeting and saving may sound boring and restrictive. But it can be done in a hassle-free way when you use the digital financial advisory tool DBS NAV Planner to track your savings and spending. In addition, you can use the NAV Planner to analyse your financial health in real time. The best part is, we will automatically work out your money flows and provide money and investing tips, as well as project your income flows so you can achieve financial wellness.