The five biggest myths about saving money

The five biggest myths about saving money
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Published: 12:45 PM, October 1, 2016

SINGAPORE — Starting to save money can seem really hard. For those who have been able to start, saving even more can seem equally difficult.

What may make saving even harder is myths about the challenges of saving. By looking at those myths and breaking through to reality, though, we can accumulate enough to meet our financial goals.


Many people don’t start saving or don’t save more because they feel they don’t have any extra money. As Seedly founder Chew Tee Ming said: “The biggest barrier to saving is the high living expenses people incur every month after receiving their salary.”

What many people don’t do, however, is to examine their expenses to see where the money actually goes. By keeping track of every expense using an app such as Seedly or even a paper diary to write down your expenses, you can find out where your money goes and figure out where there may be options to spend a little less.

“Take a close look at your budget,” Women with Cents founder Natasha Janssens suggests, “and add up how much you spend on dining out, takeaways, clothes, TV subscriptions, or gym memberships. Be really honest with yourself about the must-haves vs the nice-to-haves.”

Overcome this myth by figuring out how you’re using your money, what you can spend less on, and saving just a little bit.


Don’t buy those new shoes. Don’t watch that new movie. Skip the fancy meal. Even if cutting out these activities and more might give you money to save, it would also be depressing.

While it’s important to figure out what you can do without, that doesn’t mean making life unpleasant.

“If you punish yourself by lowering your standard of living every time you want to save money,” CreditInfoCenter founder Kristy Welsh explained, “you’ll hardly feel motivated to save.”

Instead, find smarter ways to maintain your lifestyle and still save. financial advisor Hitha Prabhakar, for example, saw that her daily Starbucks habit was costing her a lot. However, she decided that her late hours and early morning meetings made fancy coffee necessary for her productivity and sanity. She cut costs instead by buying generic groceries that were just as healthy and not as expensive.

Overcome this myth by reflecting on what matters most and figuring out what you can change while still leading a wonderful life.


Another myth is that simply skipping a latte periodically is enough. “The ‘Latte Factor’ is based on the simple idea that all you need to do to finish rich is to look at the small things you spend your money on every day and see whether you could redirect that spending to yourself,” financial author David Bach suggests.

Although that rule sounds easy, it may actual steer some people in the wrong direction. While saving is crucial, How Rich People Think author Steve Siebold writes that spending time thinking about what to do with your savings and how to earn more may be even more important.

“The masses are so focused on living frugally that they miss major opportunities,” he wrote. While rich people understand the importance of saving, “they’re focused on how to earn more and how to do more with their money”.

Overcome this myth by figuring out ways to boost your income, especially by investing better.


Another myth is that keeping the money you’ve saved in a savings account or a time deposit is enough.

As POSB itself explains, however, money lying in savings accounts earns interest rates so meagre that it is “just a little better than when our grandparents hid their savings under the pillow or in biscuit tins. Meanwhile, inflation eats away at our savings. The dollar we save today will be worth much less by the time we retire.” What’s far better, POSB suggests, is making sure you beat inflation by investing among a variety of safe and risky assets.

To overcome this myth, you can put your money in shares, bonds or other investments that earn a higher return.


A final myth is that you need to learn complex concepts such as financial analysis, asset allocation, hedging and other exotic topics, which can make investing seem daunting. The reality is that earning good returns is simpler than you think.

If you do want to spend time learning about and researching investments such as shares or bonds, you can do so. You can also use apps such as TradeHero to practice buying shares, sites such as BankBazaar to find interest rates, or services such as WeInvest to obtain advice.

If you’re not as interested in studying investments, then investing through simpler solutions such as POSB Invest-Saver or the OCBC Blue Chip Investment Plan can be far easier alternatives.


It’s easy to get caught up in myths and either not save enough or not earn enough on your savings. By busting through the myths, saving, and investing your money well, you’ll be on track to reaching your financial goals.