5 easy ways to set SMART goals and grow your savings

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25 Oct 2023


1. Build S.M.A.R.T saving habits


Start by envisioning your financial goals, whether it’s paying off your home mortgage comfortably within the loan tenure, or saving enough to take care of yourself and your loved ones. Use the SMART framework to define your financial goals and work towards achieving them.

Specific: Set a goal with clear, action-oriented details.

Measurable: Fix a quantifiable amount that you feel is adequate.

Achievable: Your goals should be attainable.

Realistic: Be practical and determine if you have the means.

Time-bound: Give yourself a timeline to achieve your goal. 


For example, instead of saying “I want a comfortable retirement”, try “I want to have a retirement income of $1,600 a month.”


By having a specific target to work towards, you can work backwards and determine how you can reach your goal.


2. Harness the power of compound interest


Take advantage of the benefits of compound interest to grow your savings over time. You earn interest when you deposit money into a savings account, and the interest you earn on the earned interest is compound interest. The earlier you start saving, the more time your money has to compound, making your savings grow significantly in the long run.


With your CPF savings earning up to 6% p.a. (if you are age 55 and above) or 5% p.a. (if you are below age 55)*, your CPF can grow steadily, thanks to the power of compound interest!


* Up to 6% and 5% is based on floor rate of 4%. 
Special and MediSave Account (SMA)
 rate for Q3 2023 is 4.01%.


3. Make the most of your CPF savings


Setting aside a large sum of money for your retirement can understandably be overwhelming, so consider starting small. For example, making a monthly top-up of $50 your Special Account (SA) or Retirement Account (RA) can grow to more than $12,0001 in 15 years.


And by making your cash top-ups in January instead of December, you will earn up to 20% more interest on your CPF savings in 10 years.


You can also enjoy tax relief of up to $8,0002 when you make a cash top-up to your CPF accounts, and up to an additional $8,000 when you top up for your loved ones.


1 Computed using base interest of 4% per annum.


2Tax relief only applies for cash top-ups and not CPF transfers. For cash top-ups to yourself and your loved ones, tax relief is only up to the current Full Retirement Sum (FRS).


4. Set aside an emergency fund for rainy days


Unforeseen emergencies can disrupt your financial stability, so it is crucial to prepare for them. Build an emergency fund that is about three to six months' of your expenses for unexpected expenses.

Starting your emergency fund does not require you to start saving the full amount all at once. You can make gradual contributions to your emergency fund to grow it steadily to your desired amount.


5. Save your way to better financial security


The key to being financially secure is not only about how much you make, but how effectively you manage your finances. One strategy is to use the 50/30/20 budgeting rule, which is spending 50% on needs, 30% on wants, and 20% on savings. Commit to saving a fixed percentage of your income every time you get paid and consider creating a separate savings account to avoid the temptation of spending the money.



Stay focused on your financial goals and lay the foundation for a more secure future by keeping to these five saving tips!


The information provided in this article is accurate as of the date of publication.