You will be able to set a target for a goal whose cost changes while you save.
Mei and Daniel, the couple from lesson 1.1, put a number against their flat's renovation two years ago. A friend had just finished hers and said it came to about S$20,000, so that is what they wrote down. When they asked two contractors for quotes last month, both came back well above it. Nothing went wrong in their saving. The target was simply out of date before they started.
Some goals hold still while you save for them. A diploma with a published fee is one. Others move: a car depends on COE prices in the month you buy, a flat on the market and the grants you qualify for, a renovation on what contractors charge by the time you collect your keys. This lesson is about setting a target for the second kind so the plan moves with the price.
The first rule is to set the target from the best current estimate you can find, and to write down where it came from and when. "A friend said" is a starting point, not a source. A quote from a contractor dated last month is a source. So is the HDB website for flat prices and grants, the LTA website for recent COE results, or a published fee schedule.
For each moving goal, keep three things beside the number: the source, the date you checked it, and what exactly it covered. Mei and Daniel's two quotes were for a full renovation of a four-room flat, but one left out the kitchen cabinets. Writing that down stops them comparing 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 can't be checked against anything, so you never know when it has gone stale.
If the money is needed in a few months, today's price is close enough. For goals several years away, prices tend to rise in the meantime, so you add a buffer. There is no correct size for it. What matters is that you choose one on purpose and record how.
Here is how Mei and Daniel did it, with figures made up for the example. Their two quotes, plus furniture and moving, put the cost at about S$25,800 at today's prices. They need the money in five years. They decided to allow for prices rising 3% a year, which they wrote down as "a cautious guess, higher than we hope, so that we are not caught short". Grown at 3% a year for five years, S$25,800 becomes about S$29,909, and they rounded it up to S$30,000.
Their note now says: target S$30,000, based on two contractor quotes from this month plus a 3% yearly buffer for five years. Anyone reading it, including themselves in a year, can see where the number came from and change one piece of it if a piece turns out wrong.
A buffer can also be a flat amount, such as an extra 10% on top of today's estimate. Either method is fine. The one thing to avoid is a buffer you can't explain, because you will not know whether to trust it later.
A moving target needs a recheck date. Every six months is a good default for goals like a car or a flat, and it fits neatly with the six-monthly review you will set up in module 8. Put the date in your calendar when you set the target.
At each recheck, look at the same kind of source again, write down the new figure and the date, and compare. If the price has moved a lot, the monthly saving figure from lesson 1.1, A goal needs three numbers before you can plan it, moves with it. COE prices are the clearest case. They are set by bidding and can swing widely from one exercise to the next, so a car target set once and never checked can be off by a large sum by the time you buy. Module 5 goes into how that works.
Most moving goals have parts you decide and parts the market decides. For a wedding, you control the guest list, the venue and the date. You don't control what a hotel charges per table next year. For a car, you choose the model and how long you keep it, but not the COE price in the month you buy.
Separate the two in your notes. The parts you control are levers: if the price rises, you can pull one, such as a shorter guest list or a smaller car. The parts you don't control are the ones to recheck. Mixing them up leads to two kinds of mistake: worrying about prices you can do nothing about, and forgetting 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.
For one goal with a moving price, write the source of your estimate, the date checked and the next recheck date.
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