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Woman saving her money ; image used for HSBC Singapore how to start building your savings article.

How to start building your savings

Want to start growing your wealth? Regularly setting money aside is the first step. Here are a few ways to move on from your piggy bank and start upping your savings game.

Practice makes permanent

It's great if you can dump a big chunk of money into your savings account once in a while, like when you receive an annual bonus. But an important first step in building your savings is to make a habit out of it, whether you're more interested in short-term savings goals or can bide your time with long-term investments. Don't wait for your bonus to roll around. Get started now with small, regular deposits.

Know your budget

Some financial analysts1 say that in your 20s you should be setting aside 6% of your salary for savings. That number should go up to 15% by the time you're in your 30s. Of course, this is just a rule of thumb, and this percentage might differ from person to person.

To know how much you can afford to save, you need to know how much money you're spending. Take a couple of months to watch your money and track your expenses, either with an app, or with a good old-fashioned pen and paper. This should give you a good idea of how much you spend on food, utilities (such as electricity, rent and water), transportation, clothes and entertainment.

Once you've got that figured out, you'll be able to decide how much you can comfortably set aside each month to start building your nest egg.

Start with setting aside a small percentage of your income. That way, your savings plan won't get derailed if you suddenly need some extra cash in addition to your regular monthly expenses. The good news is, if you find you're getting the hang of monthly budgeting, you can always increase your monthly savings allotment.

Short- or long-term investment goals?

What are you saving for? Starting a family? Getting married? A trip? A degree? A house? These would require a more short-term investment plan.

Or perhaps you're trying to prepare for the future. Being patient could mean higher rewards when you cash out but your money will be tied up longer.

Having a goal, and knowing when you want to achieve it, will help you figure out how much you'll need to set aside each month.

A goal also helps keep you motivated to save. Instead of sending your money off to an abstract place for "the future", you'll have a real, tangible reason for setting that money aside.

Set up recurring instructions

The best part about regular saving is that with each small deposit, your money grows. And with modern banking, you don't even have to remember to transfer in money every month.

Just set up a recurring instruction to move money to your savings account on the same date each month, preferably a couple of days after payday. With FAST3, the transfer is immediate and fuss-free.

Save and invest at the same time

Once you've got the hang of making regular monthly contributions, you might want to consider a Unit Trust Regular Savings Plan. Just like before, you'd still be setting money aside on a regular basis. But instead of just earning the basic interest of a savings account, you'd be investing in what is known as a unit trust2. This is a pool of money collected from investors worldwide. It's managed by a fund manager, who uses it to invest in different assets for steady, diversified, long-term growth.

A Regular Savings Plan requires one initial investment of at least SGD1,000, followed by monthly contributions of as little as SGD100 for the next five months (or longer if you prefer). It's a great way to start your investment small, and start early, and it gives you a lot of diversity in your portfolio without making you research and track the performance of a hundred different companies.

It also lets you invest in things you are passionate about, whether it's a specific industry, a certain country/region's  stock market, or even saving the environment. Have a look at some of our information about how unit trusts work.

Before choosing your unit trust, remember to complete our risk profile questionnaire to understand your risk appetite. Then, drop us a line to get started with a Regular Savings Plan.

Don't stop saving

After you've met your goals, or once you've built your wealth enough to focus more on investing, you should still keep saving. It's a great habit to get into. There will always be unexpected moments in life when you need money to cover surprise expenses. If you completely give up saving in favour of investing, then you might have to sell those investments to get cash, and you could even end up losing money when that happens.

You're better off saving a little bit all the time, so you have a cushion to protect you from unforeseen expenses. If you're ready to start doing some serious saving, take a look at our different savings accounts and see which one is right for you.


2Investment involves risk. Unit Trusts are investment products and some may involve derivatives. The value of investments and units may go down and up, and the investor may not get back the original sum invested. Past performance is not necessarily indicative of future performance. In a worst case scenario, the value of the fund may be worth substantially less than the original amount you have invested (and in an extreme case could be worth nothing). Investors and potential investors must not solely rely on the content of this material to make investment decisions and should read carefully and understand the offering documents (including the prospectus and full text of the risk factors stated therein), available at HSBC branches, before investing.

3FAST (Fast And Secure Transfers) is an electronic funds transfer service that enables customers of the participating banks to transfer Singapore Dollar funds from one bank to another in Singapore almost instantly.

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