Pump life into your savings plan
Reassess your savings goals
People save for many reasons. It could be for short-term goals (taking your family for an overseas trip) or longer term goals (your child’s education) or for retirement. Another great reason to save is to set up an emergency fund. Financial experts often recommend having enough money in an emergency fund to cover at least 3 to 6 months worth of household expenses.
Pay yourself first
This is a powerful concept. Cultivate the non-negotiable habit of depositing at least 10% of your income into a Savings account. If ends don’t meet at the end of the month, find other ways to cut back instead of cutting down on your savings. Plug money leaks – such as overdue charges on your credit cards, subscriptions to magazines that you hardly read, etc.
Establish a time frame
Set a particular date for accomplishing shorter-term goals, and make sure the goal is attainable within that time period. If it’s not attainable, you’II just get discouraged. For example, if you’re planning the overseas trip in a year, find out how much it costs and how much you need to set aside every month. Is that amount comfortable? If not, adjust your time frame so that your goals can be achieved.
Automate your savings
Direct deposit is the best thing since sliced bread. Your money bypasses you straight into your ‘hands-off account. You will not be tempted to dip into it or have the opportunity to forget or be lazy about saving. A ‘hands-off’ account simply means one in which you cannot withdraw from, so you can opt not to have the ATM card if it comes with one. Once automated, you’lI hardly miss the money.
Look for a high yield account that does more than save
With the current interest rate environment, savings accounts currently offer negligible interest rates, which may take too long to save up for anything sizable. Consider higher yield accounts such as HSBC’s new PowerVantage Plus Plan*, for potentially better returns. Half of your savings earns one-month Fixed Deposit rates and the other half is invested in carefully selected Unit Trust funds, which may potentially earn you an estimated 6% return on investment. The plan also comes with a choice of 2 tenures: 3 or 5 years to suit your savings goals. The icing on the cake – you’ll also enjoy free Takaful personal accident coverage throughout the PowerVantage Plus Plan tenure*, which means that your savings goals are protected, in the event of unforeseen circumstances. Combine automation and this account with potentially higher return and you’lI have a winning combo.
Try this in 2009 and save up a tidy sum at the end of the year.
*HSBC Powervantage Plan terms and conditions apply.