Mind those money blind spots

NAV TL;DR

If you don’t have time to read through the whole article, you can check out our short version below:

One of the biggest money blind spots is unexpected occasional expenses such as weddings, festive occasions, birthdays.

Consider what are ‘necessary’ and ‘discretionary’ expenses in your daily lifestyle.

The option to become more prudent or downright frugal is your choice to make depending on how aggressively you want to grow your savings.

Using financial tools are a way to keep track of your budget.

So many things to do, but only a limited amount of money to go around. Between paying the bills on time and ‘regular’ everyday expenses, money seems to evaporate more quickly than we realise. You wonder how to cough up spare cash to build your savings or start investing. If this is you, are you ready to take an honest, hard look at where your money is really going?



A few dollars here, a few dollars there. How it all alarmingly adds up. Perhaps you may not splurge large sums on brand-name items, but the ‘harmless’ smaller expenses can quickly add up if you are not diligently keeping track.

A. One of biggest money blind spots are not the big ticket items like that year-end holiday, nor the regular spending like your mobile phone bill and data plan.


The dreaded leak is in the occasional expenses:

Special occasion meals
Gifts for weddings, birthdays, festive occasion, promotions (other’s, not yours)
The occasional ‘me time’ pampering treat
The supposed one-off incidental expense

What do these all have in common? The appeal to your generosity! Also, the likelihood of exclusion from any monthly or yearly budget plan you may have.

B. Another consideration is between what is ‘necessary’ and what is ‘discretionary’.


We all need food, that is an undoubted necessity. But what is discretionary is whether we buy groceries and prep meals, or dine at hawker centres, cafes and restaurants, or order delivery. If we buy groceries, do we prefer the wet market, supermarket or organic and specialty produce.

Depending on what we value:

Comfort
Convenience
Companionship, or
Commitment to health


We make discretionary decisions on what we spend on and how much.

C. Next, consider ‘price’ versus ‘value’.


Something you buy on sale or in bulk but hardly use or spoils soon after gives you less value than something a little more expensive that lasts a thousand uses or more.

Keeping these three things in view will help you reduce your money blind spots and free up more cash to build your savings.



Whether you decide to ‘be a bit more careful’ about your spending, or declare ‘I’m going to be a minimalist!’ the option to become more prudent or downright frugal is your choice to make depending on how aggressively you want to grow your savings.

Living in a country with a high standard of living can be stressful. We take reference from how our peers or society at large is spending money and peg or definition of ‘normal’ to this. Be willing to hold on to your e-wallet for just a minute and think again. The recent popularity of Mindfulness can be applied to shopping and spending too.

Are you buying something because it is needful or because it is on sale? Remember, a discount or deal may work out more costly if you end up not using that item after purchase. You also have the power of choice to buy something you genuinely need at full price, end-of-season price, warehouse price or pre-loved price.

If you are serious about taking control of your spending, it may be helpful to put some effort into decluttering your space. Seeing a heap of items from your home or room that you do not really need can increase your awareness of where your money leaks really are. Not to mention, you may be able to sell some of these to recoup some cost.

Often, paring down our spending is a consequence of our lifestyle choices. From our preferred mode of transport everyday, to the frequency of our social engagements and minimum standards for our travel arrangements, there are dollars to be saved each time we make an active choice.



When was the last time you checked your mobile phone? From subscriptions to mobile wallets, money outflows are aplenty if you do not stem the tide.



Much like decluttering your home, spring cleaning your mobile phone can save you a tidy bundle: uninstall apps that have fallen out of favour, de-activate pre-saved credit cards to make you think twice before clicking ‘buy’, or discover unused credits, points or value.



Mental accounting is less reliable than we would like to give ourselves credit for. While it does take time and effort to populate a budget tracker, the insight you derive about your true spending patterns and uncovering your money leaks could be a rewarding and empowering process.

This is especially true for those ‘occasional’ expenses. Hunt down as many as you can. Add up the number of weddings you attend a year, count how many presents you buy each festive season, tally the number of special occasions you celebrate (parents‘/parents’-in-laws’ birthdays, anniversaries).

Using the Your Financial GPS tool is one way to keep track of your budget. Get a bird’s eye view of your ‘money in’ versus your ‘money out’, then set your saving goal and get a visualisation of where you are in relation to the goal you have set.

Get started. Make choices. Take action.

Hello, we’re NAV.

Inspired by the word “navigate”, NAV is an initiative by DBS & POSB created to help you navigate your finances, your way. Whatever your financial goals are in life, no matter what situation you are in, we’re here to help you on your financial journey.

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