Savings 101 – Basics of Building a Financial Foundation

4th April 2017

Having savings in your bank or under your mattress can be beneficial in a number of ways. It could be for an emergency car part you really need to change, a deposit for that dream house of yours or simply some extra pocket money for your next vacation. Regardless of your motivations to save, the extra money in your bank account gives you something called Liquidity. As the name suggests, being liquid means you are able to move and flow with the financial tides. Being liquid also means you have the freedom of using that money; that which you don’t have if you’re all-in in stocks or forex or real estate because you don’t have direct access to your cash in these assets.

A little bit of context

You may have heard about a survey that was conducted last year in 2016 by GoBankingRates that found that 69% of Americans have less than $1000 in their bank accounts. The population of the United States of America was short of 323 million people meaning that 69% is roughly 222 million people; all with minimal savings. Now, it may not seem like that big of a deal to know about how some people from across the world deal with their finances, but it puts into context that even people from “modernised” societies lack the habit of saving up.

There’s no data on how many Bruneians save but we can see that a lot of us definitely go paycheck to paycheck. Just seeing the rush to pay off bills and eateries packed for a week or so after pay day just gives us a glimpse into the mindset here. “We have money therefore we have to spend it!” seems to be the mantra for many and not just our locals.

But let’s take a moment to reflect a little; ask yourself “If my car suddenly broke down, and I need a very specific part costing $1000, how hard would my life be?” Your answer could range from “That’s pocket change to me” to Googling “How much is market rate for a kidney”. (Fun fact: It’s around $15,000 to $200,000 depending on where you’re from)

What are the benefits of having savings?

Learning to save equips you with certain assets namely:

  1. You have extra money!
  2. Peace of mind of not worrying over emergency expenses.
  3. Cultivating a positive habit.
  4. Learn to be more disciplined.
  5. It gets easier over time.
  6. Seeing your account grow is a great feeling.

What are the drawbacks?

Savings is a form of investment vehicle. It is considered as such because you want it to grow without additional effort on your part. The biggest drawback for a savings account is that the interest is usually minuscule; usually unable to beat inflation. Be glad that this is the biggest risk for having savings, other than a total economic collapse. The goal here is to build up a nest egg so that you may use it to fund better investments and so on.

How do I start saving?

All it takes to start saving was the thought which led to the want to do it. There are a few different methods to do it but you would have to find one that suits your lifestyle.

The basic framework will include:

1. Choose a place to park your money.

Here we have a few banks to choose from namely Baiduri, BIBD and Standard Chartered. Do your research for the savings account that match your needs. I personally chose an account which gave the highest interest per annum and had no charges so it doesn’t eat into your savings.

2. Create a budget and stick to it!

This will be a separate topic in itself but the gist is to write down or use a budgeting app to find out how much you are spending monthly on necessities. Then you budget a FIXED amount which you can spend and try to stay within the limits. What if you spend under your limit? Put the rest into your savings to pad it up faster!

3. What are you saving for?

Ask yourself what is most important for you at this time, the goals will reflect how long you have to save for depending on how much capital you inject.

Short term goals (1 – 3 years)

  • Saving up for a vacation.
  • Build your emergency fund. (Try to aim for 3-9 months of your monthly expenses, just in case)
  • Down payment for a car.
  • Investment capital.

Long term goals (4+ years)

  • Down payment for a house.
  • Education for your kids.
  • Retirement. (Not the most efficient but possible)

Regardless of the reason, goals give some motivation to achieve it within a time frame. And this in turns makes it easier to put your hard earned cash away without feeling like it’s going into a void.

4. Pay yourself first!

What this means is if you get your pay today, you should immediately take the amount you want to save, and put it in your savings. This prevents you from saving “what’s left” which usually will be not much, if any. The amount you save can be 10% of your paycheck or any set amount you want. But don’t change the values too often or it will become a habit to play with the numbers rather than save.

Money you gain from bonus or ang pao during festivities can all go into your savings because you know from your budgeting that you don’t need it to survive at the present time. So why not reach your savings goals faster this way?

5. Don’t EVER touch it

Do not get tempted to splurge on something unnecessary. The temptation is real when you see your account grow an additional digit. Building up this little nest takes months or even years, and wiping it out could take just seconds. Keep it separate from your normal spendings and you’ll be fine.

6. And that’s it!

Simple right? While the theory is simple, getting started is a hurdle for some. Don’t think too much into it and just pay yourself on autopilot. You could even set up a separate bank account and request an automatic transfer every month.

When I started employment, I was making $300 a month. I have already made up my mind to save back then and as I did not have any dependents, I put $100 away every month. I doubt many are willing to put 33% of their pay away like this, but as a young adult, it disciplined me to keep at it. Over time, I changed jobs and started to be able to put in a little more. Now, I pay myself 20% every month and my savings is building up nicely.


It doesn’t matter where in life you are at right now; if you don’t have any savings yet do consider starting one.The numbers and percentages are up to you. The most important thing is just do it! One of my favourite sayings that can be taken into context of finances is:

The best time to plant a tree is 20 years ago. The second best time is now.

– Chinese Proverb

 If you’ve already planted your tree, good for you! If not, I hope you will be able to do it because frankly, you CAN succeed.

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