Buy necessities in bulk—check.
Identify and make a list of needs and wants—check.
Get a savings account with a decent interest rate—check.
Share subscriptions with friends and family—check.
Oh, the lengths we go to to save a few extra dollars. What to do? Saving money is, after all, the fundamental principle underlying sound wealth preservation strategies.
And yet, have you had times when you would peer at your bank balance at month’s end and realise your coffer didn’t grow as much as you thought it would? Turns out, we sometimes spend way more than what we were planning to spend AND were unaware. Yikes!
The Financial Leaky Bucket—What Is It?
What’s worse than a leaky bucket? An angsty one.
Bear with us as we explain what lousy containers have got to do with your savings. Market researcher Andrew Ehrenberg first used a leaky bucket theory to explain relationship marketing. Not going to bore you, so we’ve summed it up in simple terms:
- The water flowing into the bucket represents newly acquired customers
- The water that stays in the bucket are the loyal customers, and
- The leaks from the holes represent customers lost to competitors
Get the idea now? The leaky bucket theory holds water (pun intended) when it comes to personal finances. Every month, our income fills our buckets. We keep most of that in our bank accounts, CPF (thanks to the gahmen) and perhaps even in old biscuit tins (not the best plan, my friends). Now imagine these buckets also have taps. We turn on the tap to pay for the things we need and want—food, drinks, clothes, gadgets and transportation etc.
“My life is brilliant, my life is pure. I saw some savings, for that I’m sure.”
Like us (and James Blunt), your life is probably full of meaning, a mixed bag of fun and work. There are lots of things that we spend our attention on that perhaps make us less mindful of our finances. At such times, our buckets tend to grow fragile and begin to form holes. By the end of the month, our 4L bucket is half empty even though we’ve consciously used 1L only. The other 1L simply leaked out as outflows of cash that are unplanned and unnecessary.
Sian, right?
There are a few scenarios we’ll face, depending on how much our buckets can still be called buckets:
“IT’S NOT THAT SERIOUS, WE’RE STILL ON TRACK TO HIT OUR GOALS. NO PROBLEMO, AMIGO!”
The bucket just needs a little tape. This is like taking three steps forward and one step backwards when it comes to savings. We might go over budget once in a while, but we can make up for it easily and be back on our savings track.
“WE’VE WANDERED A BIT OFF COURSE AND NEED TO DO SOMETHING ABOUT IT NOW.”
Ok, big holes in the bucket. This time, it’s like taking three steps forward and two steps backwards. We’ll still eventually reach our savings target but it’ll take longer than we might like. If we’re saving for a big purchase like a BTO flat, we might be less than jolly with the delay. Neither will our spouses.
“MAYDAY! MAYDAY! WE’RE IN THE RED AND GOING DOWN!”
At this point, we won’t call said receptacle a bucket anymore. This is like taking three steps forward and four or five steps backwards. Not only are we spending every dollar we earned, but we are also spending money we have yet to earn!
We sure hope none of the three scenarios applies to any of us. Before we dream about cash raining down, we have to make sure we are not standing on grills.
COMMON MONEY LEAKS SINGAPOREANS FACE
“Fret not, knowing is half the battle!”
HAVING MULTIPLE MONTHLY ENTERTAINMENT SUBSCRIPTIONS
We sure love catching Marvel superhero movies, Korean tear-jerkers and brainless American sitcoms. But do we need Netflix, Amazon Prime, HBO and Viu subscriptions at the same time?
Let’s say we really want to watch something that is exclusively available on just one platform – maybe it’s Netflix’s The Witcher, The Undoing on HBO or The Boys on Amazon Prime. Instead of subscribing to every service by ourselves, getting family members to chip in will make the fees count. If you find yourself the only subscriber, explore cutting the subscription once you’ve finished the series you’re there for.
Hooray! It’s possible to reduce expenses WITHOUT having to sacrifice the things we love.
NOT TAKING ADVANTAGE OF MOBILE PLAN BENEFITS
If your 2-year phone contract is up and you aren’t planning to change your phone, SIM-only plans are a great way to save. The standard 2-year contracts have the cost of the phone factored into the monthly bill, averaging around $50/month. If your contract is up, switching to a SIM-only plan can see savings of up to $30/month and still enjoy the same plan features!
SHOPPING ACROSS MULTIPLE ONLINE PLATFORMS
We Singaporeans are big online shoppers. We sometimes find ourselves comparing prices across Shopee, Lazada and Amazon to see where the best deals are. One way we can plug a leak here is by keeping to as few platforms as possible at any one time. By making purchases across multiple platforms, we may find ourselves paying more because we’re not hitting the minimum spend to unlock free shipping.
Looking at all these culprits, we can see why leaks can easily sneak up on us. Even when it seems like we’re getting a good deal, it can actually be another leak in the bucket.
“Sneaky little hobbitses!” – Gollum
FIXING FINANCIAL LEAKY BUCKETS 101
Hugo’s got many ideas and tricks up his digital sleeves on optimising our expenditures. Now that we know some of the common causes of cash leaks, we can start looking at how to plug the holes. The way we see it, it doesn’t mean we need to make huge cuts to our expenses and start living in caves; it’s all about
- Becoming a genius budgeter—not a single cent spent will go unnoticed
- Being a “woke” spender—unlock your inner deals hunter and make every dollar count
Better than being “shook” by plundered bank accounts
BE MINDFUL OF YOUR DAILY EXPENSES
Fixing money leaks begins by looking at where our money is going. Go through day-to-day expenses like gas, groceries, coffee, meals, etc. While these are all small cash outflows individually, excesses can quickly add up. Most of the expenditure here will be necessary for daily living, making every dollar count in these areas will go a long way.
If you are trained in accounting, tracking expenses will be easy peasy for you. For the rest who are not as initiated in the way of Accounting, do not worry! There are many tools out there that help track expenses and give a better picture of what we’re spending on.
Now, we can start looking for better-priced alternatives a.k.a. substitution. Say one of your recurring expenses is buying an afternoon bubble tea from the Chicha San Chen shop around the corner from your office for $4.50. Next time, try going to KOI instead—the bubble tea is just as nice and a teeny bit cheaper at $3.40 (based on 2020 prices).
When we track expenses and look for better-priced alternatives, we can patch up some of the leaks in our money bucket and continue to spend on the things we need and enjoy without breaking the bank.
FIND THE BEST PRICES—“WOKE” DOESN’T ALWAYS MEAN “BROKE”
“A smart spender is always better than a giam siap (miserly) fella.”
Recurring bills like mobile plans and utilities are great places to find savings. While we can’t exactly give up our phone plans or cut off our utilities, we can look for cheaper alternatives to the providers we have right now. Yeah, researching mobile or electricity plans is boring, so we like to do it once, turn on automatic payments and never think about it again. LEAK ALERT!
However, we like to look at the brighter side of life! Having a myriad of providers also translates to OPTIONS! We’ve suggested some cheaper alternatives for us to get started on:
- For electricity, we can opt to switch from Singapore Power to PacificLight (no contract) or Union Power (1-year contract).
- For mobile data, we can consider switching from StarHub or SingTel to TPG (SIM-only plan at 50GB for $10/month) or MyRepublic (SIM-only plan at 20GB for $20/month).
- If you are hitting the gym purely for the treadmills and weights, why not sign up to memberships by AnytimeFitness ($90/month on 1-year contract) or Gold’s Gym (starting from $80/month on 1-year contract) instead of Virgin Active’s?
“Power to the people!”
If you’re thinking of changing your mobile or broadband data plans, keep an eye out for promotions available at the beginning of the year or around Chinese New Year. Huat ah!
You can switch to cheaper options for some of your daily expenses as well.
- Switch from Grab/Gojek to public transportation. Really, Singapore’s buses and MRT are top-notch and amazingly cost-effective.
- Support local culture—choose a $1+ kopi over a $5+ cafe latte (remember to opt for siew dai). If you really need a kick, getting a kopi gao will not cost more. Steady bom pipi!
- If you’re thinking of having a salad for lunch, your friendly neighbourhood cai png (mixed dish) stall has enough veggie options to create a sub-$6 salad bowl. #shiok
TL;DR
“I can already hear the many ka-chings coming your way!”
So we all have a leaky bucket, but now you have some ideas for how to start patching up those leaks.
Here’s what you need to remember:
- Find the culprits causing the leaks
- Track your day-to-day expenses
- Switch to cheaper alternatives
Stay tuned for more #HugoHacks on how to improve your finances! Meanwhile, if you’ve got a bucket you want to be patched, download the Hugo app here!