A penny saved is a penny earned

When we think about financial planning and budgeting, what most easily comes to mind are the big money decisions - taking out an insurance policy, putting funds into the stock market, drawing up a 20-year plan for the whole family.

This past month, however, I have been learning to pay attention to the smaller stuff - tracking my spending, moving my savings to an account with a higher interest rate and learning how to shop smarter so I can earn as much cashback as possible.

It began with some casual conversations with colleagues and work acquaintances.

"Do you keep track of your expenses?" one banker asked me and my colleagues over lunch a couple of months ago.

I blithely said no, while everyone else talked about the Excel spreadsheets or mobile apps they used to record every dollar they spend each day.

My herd mentality kicked in, and I felt like I was failing to do this basic thing that perhaps was an essential part of being an adult.

Actually, I used to track my expenses when I was in my early 20s and broke, and wanted to figure out why.

As I moved into my late 20s and 30s, and gradually earned a higher salary, I found it much easier to stay on top of my finances. I could pay my mortgage, bills, insurance premiums and even make some investments after setting aside funds for savings - and still see my bank balance grow steadily.

So I stopped feeling the need to track where every dollar went.

Now though, knowing that my peers were still making a habit of tracking their expenses, I got curious about what I would find if I did the same.

So I started a Google spreadsheet and began recording every cent that left my wallet.

Some people report that when they began tracking their expenses, they felt depressed or shocked at seeing on paper just how much they spent, and they gave up on the exercise because it was emotionally and mentally easier not to know.

Thankfully, my spreadsheet has not thrown up any major surprises. Rather, I found that the very act of noting down every expense made me more conscious of my purchasing decisions.

While before I would not have thought twice about using Uber or Grab to get to my appointments, I now find myself debating whether it would be worth the expense.

When I do opt for Uber these days, I make sure to choose UberPool, which offers a cheaper ride even if you end up not having to share the car with other passengers.

And while before, I would have been easily lured by "Sale" signs at my favourite stores, now I am much more circumspect and have started to weigh my real needs against mere wants.

That mindset change naturally made me think about what other small changes I could make to be more prudent with my money.

That led to another conversation with colleagues, this time about deposit accounts and interest rates, which then led to a search for the best interest rate offer in town.

I surveyed a few and found that many of the deposit accounts boasting higher-than-average interest rates would require me to purchase a new investment or insurance plan in order to earn the banner rate.

Some also require you to spend a minimum amount on your credit card each month to qualify for a better interest rate on your savings.

I eventually found one savings account that did not require me to spend any more money than I already do.

Nor would I have to sign up for a new card, investment plan or insurance policy. (It helps that I already have a credit card issued by the same bank.)

However, just by transferring the bulk of my savings - now split into two other bank accounts - into this one account, I could earn a higher interest rate.

Once I get my salary deposited in this account and transfer my insurance premium payments so that they come out of this account too, I get an even higher rate.

And when I pay my credit card bills from this same account, my rate goes up some more.

All in, once I get all these affairs in order, I stand to earn about $100 in interest every month, without having to spend more.

It does require a lot of paperwork in the meantime, but I think it is worth the effort.

With my expense spreadsheet and new deposit account in place, I started to wonder about how else I may have been wasting money all these years, and how I could shop smarter and save even more.

Lots of credit cards offer cashback rewards and I have used one for years which I swear by.

But recently I learnt of another way to earn cashback - a website called ShopBack. Lest I sound like a corporate shill, let me just say that I was pleasantly surprised after trying it out.

The site is very easy to use and it has linked up with a wide variety of merchants.

Just last week, I ordered diapers, formula milk powder and personal care products from my usual grocer Redmart via ShopBack, and received over 7 per cent of my bill back in cash. Not bad at all.

Use a credit card with cashback benefits to pay for purchases via ShopBack, and you get even more bang for your buck.

All in, I have to admit that my efforts are not netting me great amounts of money - I'm cutting back on a taxi ride here and there, earning back small amounts in cashback and interest each month.

It's not exactly the kind of investment gains that would make me ultra wealthy.

But it makes me feel like a real adult that I am taking charge of my money and paying attention to the details.

I am still on the lookout for other small ways to maximise my dollar and make it work harder, so if you have any tips, I am all ears.

This article was first published on July 24, 2016.
Get a copy of The Straits Times or go to straitstimes.com for more stories.