10 ways you can save money, even in the upcoming recession

Our CPF SA is meant for our retirement and the money we top up into the account will form part of our retirement sum. We are encouraged to top up our CPF SA under the Retirement Sum Topping-up Scheme (RSTU) for two key reasons:

To earn higher returns: Get 4% returns on your CPF SA money. How else would you get a 4% return that is risk-free? You also get an additional 1% in interest for the first S$60,000 of your combined CPF balances.
To get tax relief: Topping up your CPF SA with cash gets you up to S$7,000 in tax relief. You get an additional S$8,000 tax relief when you top up your spouse’s CPF SA. This means you can get up to S$16,000 in tax relief when you top up both you and your spouse’s CPF SA.

Our CPF SA money can still be used to invest in approved investment schemes under the CPF Investment Scheme (CPFIS).

You can also consider transferring your CPF Ordinary Account (OA) money into your CPF SA to earn higher interest. Your CPF OA earns 2.5% returns and can be used for purposes such as paying for your house. Do note that this transfer from CPF OA to CPF SA is irreversible.

What better way to show your filial piety than to help your parents prepare for a comfortable retirement?

Under the Retirement Sum Topping-up Scheme (RSTU), you can top up your parents’ CPF SA or CPF Retirement Account (RA). If they are under 55, you can top up their CPF SA up to the Full Retirement Sum (FRS) that currently stands at S$192,000 . If your parents are over 55, you can top up their RA, up to the current Enhanced Retirement Sum (ERS) which is S$288,000.

The savings in their CPF SA and CPF RA can earn an interest rate of up to 6% p.a. How this 6% is calculated:

4% interest earned in CPF SA or CPF RA
Additional 1% interest on the first S$60,000 of combined CPF balances
Additional 1% interest on the first S$30,000 of combined CPF balances if they are aged 55 and above

How does this get you extra cash when you’re actually parting with it, you ask? Besides helping your parents get one step closer to the FRS or ERS, you enjoy tax relief of up to S$8,000 per calendar year.

Similarly, you can also top up the CPF of other loved ones such as your spouse, parents-in-law, grandparents and siblings. However, the tax relief would be maxed out at S$8,000 as it falls under the same category of making a cash top-up for a loved one.

Apply for priority banking

Credit: agcreativelab/123rf

3/10

One of the best ways you can grow your wealth is through priority banking. You’ll be rewarded with the best perks in the market in exchange for transacting in large amounts with the bank of your choice. With that said, banks require a minimum amount, usually ranging from S$100,000 to S$500,000 of assets under management (AUM).

It may be quite a large sum for many, but you’ll get to enjoy a host of lifestyle and financial benefits. Think exclusive discounts at your favourite restaurants, airlines and grocery stores, free access to airport lounges, and 24/7 access to a dedicated Relationship Manager who can offer you insights and financial advice for your investments.

They also have a wide range of financial services and solutions for you like higher interest rates and exclusive investment products, to help take your wealth to the next level.

Each bank ranges in the perks they offer, so you can take some time to do your research and find the best priority banking service for you.

Donate money to get tax relief

Credit: pixelliebe/123rf

4/10

Speaking of tax relief, making donations can get you the same privilege. But for our donations to be tax deductible, they have to be cash donations made to an approved Institution of a Public Character (IPC) or the Singapore Government for causes that benefit the local community.

You can get 250% tax deduction for qualifying donations. For example, if you donate S$5,000, the deductible amount would be S$12,500. This means that your tax-assessable income for the year is reduced by S$12,500.

Besides cash, you can also donate shares of stocks that are listed on the SGX, or unit trusts traded in Singapore. In order for the tax deduction to be reflected in your tax assessment for 2023, you will have to make your donation before the end of 2022.

Invest in Real Estate Investment Trusts (REITs) for dividends

Credit: eamesbot/123rf

5/10

Singapore is known to be a REITs haven. There are currently 42 REITs listed, making up over 10% of the market capitalisation of the SGX, with S$90 billion.

Singaporeans invest in REITs for their high yield. These yields can range from about 5% to 9%, making them a great inclusion for an income-generating portfolio. This yield comes from REITs distributing at least 90% of their taxable income; income they earn through collecting rental.

COVID-19 has shrouded the REIT market with uncertainty. From an investor’s point of view, the drop in foot traffic in malls (retail REITs), the absence of tourists in Singapore (hospitality REITs) and increased remote working (commercial REITs) is a cause for concern. However, Singapore’s banks' dividends are expected to make a ‘strong comeback’ as MAS has removed the 60% dividend distribution cap due to the banks’ strong positions last year.

For those looking to invest in REITs, besides doing your own homework and selecting individual REITs to add to your portfolio, you can also opt to invest in one of the three REIT ETFs available, or go for the REIT-focused portfolio called REIT+ introduced by a robo advisor called Syfe.

There’s no escaping CPF if you’re mentioning Singaporeans and money in the same conversation.

Each month, we compulsorily contribute a portion of our salary to our CPF. If you are a Singaporean under 55 years old, you contribute 20% of your salary to your CPF while your employer contributes another 17%. This salary allocation decreases as you age beyond 55 years old.

This 37% contribution is further split into three accounts, our CPF OA, CPF SA and CPF Medisave Account (MA), each with a different purpose. You can read our guide to CPF here.

While some first-jobbers may bemoan the impact CPF contributions make on disposable income, it sets us up for a more comfortable retirement in our later years — in an instrument that buffers against the effects of inflation, no less.

Hunt for the best deals

Credit: weedezign/123rf

7/10

If anything, this is Singaporeans’ secret sauce to becoming rich. We simply love a good deal —  even if it’s just to save fifty cents — and the kind of savings we’ve gained out of our lifelong obsession is seriously nothing to scoff at.

It’s the little things that count.

From the best buffet deals, best staycation promotions, best high-tea promotions and even the best savings accounts to park our money, we hunt for the best deals to find ones that make the most bang for our buck.

If you’re already a pro deals hunter, you can consider putting these extra dollars in a savings account, alternatives to savings account, fixed deposit or start investing with a Regular Savings Plan (RSP) or a robo-advisor.

In the past, investing was only associated with the rich as you needed a sizeable amount of funds. However, investing is getting increasingly accessible and easy, requiring as little as $1 to make a difference.

Recently, many e-wallet platforms have pushed out modes of investing through their apps, like Grab Invest and SNACK Income that allows you to pump in bite-sized amounts in your investment portfolio. This is great for those who are not earning a salary yet but yet still want to make their wealth grow. Some of them even offer decent insurance coverage on the side. A little goes a long way!

During the pandemic, the interest rates for Singapore Savings Bonds (SSB) were at an all-time low with an average of about 1.3% p.a. But now that the economy is recovering, you’ll be happy to know that the rates have now improved tremendously, with the highest being 3% p.a. for the tranche in July 2022.

If you want to grow your wealth but yet shy away from risks, SSBs are a great way for you to earn interest higher than your average savings accounts. Simply keep your money in for the entire 10-year tenure and you’ll be able to receive the full interest earned on your deposit.

SSBs also give out dividends every six months and be automatically transferred to your bank account linked to your CDP Securities account, and can serve as a passive income stream to complement your full-time salary.

Jump through hoops to save money

Credit: thitarees/123rf

10/10

Have you walked from MRT station to MRT station just so you can avoid paying for public transport? Or have you used your student card to score student deals even after you’ve graduated?

As Singaporeans, saving money is in our blood. I don’t know about you, but I have personally refused to pay the extra 50 cents for an upsized drink just so I can save the extra money. And I’m proud of it. Why pay more money when you can save it right?

So if you’ve gone all out just to save that few dollars, you’re not the only one. There’s no doubt that Singaporeans just love their money. If you’re interested, we’ve asked some Singaporeans what they were willing to do just to avoid paying extra.

This article was originally published on SingSaver. SingSaver is a personal finance comparison platform that allows users to easily compare credit cards, personal loans, and insurance for free while helping empower people to lead healthier financial lives through increased financial literacy.