You will be able to set a target for a goal whose cost keeps changing while you save.
For a goal whose price changes while you save, set the target from the best current estimate you can name and date. If the goal is years away, add a buffer you can explain, and check the price again every six months so the plan keeps up with the price.
Some goals have a fixed price while you save for them. A diploma with a published fee is one, because the figure you see today is the figure you will pay. A moving goal is one whose price changes while you are saving. A car depends on COE prices in the month you buy, a flat depends on the market and on the grants you qualify for, and a renovation depends on what contractors charge at the time you collect your keys.
Mei and Daniel are the couple from Lesson 1.1, "A goal needs three numbers before you can plan it". Two years ago they set a renovation target of S$20,000 for their flat (an example figure). They chose it because a friend who had just finished a renovation said theirs cost about that.
Last month they asked two contractors for quotes, and both came back well above S$20,000. Their saving had gone fine, but the target itself was already out of date before they started saving.
The first rule is to set the target from the best current estimate you can find, and to record where it came from and when. A source is an estimate you can name and date. What a friend said can be a starting point, but it does not count as a source. These do:
a contractor quote dated last month the HDB website, for flat prices and grants the LTA website, for recent COE results a published fee schedule
For each moving goal, keep three things next to the number: the source, the date you checked it, and exactly what it covered. Both of Mei and Daniel's quotes were for a full renovation of a four-room flat, but one left out kitchen cabinets. They wrote that down so they would not compare a partial quote with a complete one.
The date matters as much as the figure. A COE result from three years ago tells you very little about the price you will pay. A target with no date on it cannot be checked, so you have no way of telling when it has gone stale.
If you need the money within a few months, today's price is close enough and you do not need a buffer. For goals several years away, prices tend to rise, so you add one. A buffer is an amount added to today's estimate to allow for those rises. You can set it as a yearly growth rate or as a flat amount on top of today's estimate, such as an extra 10%, and either method is fine.
There is no correct buffer size. What matters is that you choose it on purpose and write down how you chose it, because if you can't explain a buffer, you won't know later whether to trust it.
Mei and Daniel added the two quotes to the cost of furniture and moving, which put the renovation at about S$25,800 at today's prices (an invented example figure, as are the five years and 3% below). They need the money in five years. They chose a buffer of 3% a year and recorded it as "a cautious guess, higher than we hope, so that we are not caught short". S$25,800 grown at 3% a year for five years comes to about S$29,909, and they rounded that up to S$30,000.
Their note reads: target S$30,000, based on two contractor quotes from this month plus a 3% yearly buffer for five years. Anyone reading that note, including the two of them a few years from now, can see what the target rests on and change one piece if it proves wrong.
A moving target needs a recheck date, the day you look at its price again. Every six months is a good default for goals like a car or a flat. Put the date in your calendar on the day you set the target.
At each recheck, look at the same kind of source as before, record the new figure and the date, and compare it with your last one. If the price has moved a lot, the monthly saving figure you worked out in Lesson 1.1 moves with it. In Module 8 you will set up a six-monthly review, and this recheck fits into it.
COE prices are the clearest example of a price that moves. They are set by bidding and can swing widely from one exercise to the next; Module 5 explains how COE pricing works. A car target set once and never rechecked can be off by a large sum when you come to buy.
Most moving goals have parts you control and parts the market controls. With a wedding, you control the guest list, the venue and the date, but you do not control a hotel's per-table price next year. With a car, you control the model and how long you keep it, but you do not control the COE price in the month you buy.
Keep the two apart in your notes. The parts you control are your levers, and if the price rises you can pull one, for example by shortening the guest list or choosing a smaller car. The parts you do not control are the ones to recheck every six months.
Mixing them up leads to two mistakes. You worry about prices you cannot affect, and you forget that a decision you can still change would close the gap.
Pick the one goal on your list whose price moves the most. In the activity you will write down where its estimate came from, when you checked it, and when you will check it again.
Pick one goal whose price moves. Write down where your estimate came from, the date you checked it and the date you will check it next.
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