Finance Tips to Prep Yourself for the Coming 2019
The year is coming to an end, and as we lookforward to the festive seasons and celebrations during christmas and new year,let’s not forget that 2018 is coming to an end and here come the year 2019.Many a time, even working adults themselves do not know how to properly keep their finances in check,spending more than what they could afford with credit cards, or luxury brandedgoods, trapping themselves in a toxic cycle that never ends.
COMMON SCENARIO OF WORKING ADULTS: SPLURGE WITH ALL YOU HAVE LEFT
For instance, if Person A were to take home $2,500, after deducting expenses such as transportation, meals, entertainment, insurance, handphone bills and utility bills, they would be left with approximately $1,000.
How would they utilize this sum of dispensable cash? Most Singaporeans would start to splurge on branded goods, or even buying stuff that they do not essentially need but just because everyone has it, or it is eye catching, they make the purchase. This should not be how this $1,000 should be spent.
The ideal way that this $1,000 should be spentis to save $200 – $300 for rainy days, remaining amount to invest in aninvestment instrument depending on your risk appetite. If you would rather playsafe and still get a substantial returns, you may consider investmentalternatives such as bonds, one such bond would be the Singapore Savings Bondswhich is a type of securities offered by the government which is suitable forlong term investors to invest in a flexible and safe way.
In order to have that mindset of a successful investor, first and foremost, you have to know your money well. What better time than to start preparing yourself for the coming year of 2019. Let bygones be bygones, a new year equates to a new beginning. Start afresh, start cultivating good financial habits to secure and safeguard your future today.
Here are some financial tips that we thought you should know to kickstart that habit of preparing yourself financially.
FINTIP#1 : ALWAYS PRE-PLAN AND BE PREPARED
Prepare yourself for any uncertainties thatyou would be prone to. Draft out a will, nominate your beneficiaries, who wouldbe the executor, allocate all assets and keepsakes to whom you would like toentrust to as accurate as possible. Once that is done, you need not worry what would happen in the event of yourpassing. In the event of not drafting up a will, yourwishes may not be accurately fulfilled and certain assets may fall into thewrong hands as the state will take over the administration of the allocation ofassets.
Once that is done, pen down a list of long term/current expenses of the household.
E.g. An example of what a typical household expenses should look like:
- Monthly utility bill
- Monthly mobile & internet bill
- Monthly car loan repayment
- Monthly/weekly car petrol top ups
- Weekly grocery shopping
- Yearly/monthly insurance premium
- Monthly meals budget
Here on out, set aside money for each expense, and make sure you do not touch those money. If there are surpluses, you can allow it to rollover for the following months.
- Car accident
- Car repair
- House furniture/electronics spoil due to wear and tear
- Mobile bills exceeding call time or data bundle
- Hospitalization bills
- Entertainment expenses (e.g. special occasions such as birthdays, christmas gift exchanges and dinner, new year eve celebration)
It is only to be prepared for the above andset aside money for those, by taking your finances in control, you are being responsible toyourself and your loved ones financially.
FINTIP#2 : DIFFERENTIATE BETWEEN THE NEEDS & WANTS
A typical example between a need and a want: a rice cooker vs partying and going out for drinks every weekend. The amount of money you can save that month alone should suffice a rice cooker instead of eating out everyday. Identify and single those expenses between needs and wants, there on, eliminate them one by one, meanwhile not incurring newer expenses.
FINTIP#3: TAKE NOTE OF YOUR CREDIT CARDS, EXPENSES & DEBTS
It is important to know where your money is going. There and then, it will be evident to you where is your money leaking to and why are you just making ends meet even if you were to earn a salary that is way higher than your peers, but when it is closer to the end of the month, your bank account is nearing to zero. As much as you can do not utilize your credit cards and if necessary, ensure that they are being cleared every month when your paycheck comes in to avoid interest fees, late charges, finance charges, etc. These would snowball and pile up which would usually stress most people out financially.
FINTIP#4: ELIMINATE OR REDUCE YOUR EXPENSES
Eliminate the bad habits, wants, and see how you can reduce your expenses.For instance, take a look at your handphone bill. If you are a subscriber thatis paying $90 odd dollars worth of subscription fees every month but you do notneed that much outgoing minutes or data which is always underutilized, call upyour telco and check if you are able to downgrade your plan to fit your monthlyphone usage. This is a good example of how you can reduce an ongoing long-termexpense without the need to cut it out entirely.
FINTIP#5: DISCIPLINE – BUDGET AND FOLLOW THROUGH
After establishing the long-term expenses, reducing those that you are able to, and eliminating most of the wants, you have to be discipline and follow through your plan. There are mobile apps that would offer reminders to budgeting or you can even do it the traditional way, by penning it down on a pen and paper and checking it off every month.
Discover and find out which path works best for you.Some may like the idea of having an app which automatically reminds you aftercustomizing the settings, whereas some might prefer the pen and paper idea.There is no wrong or right here, as long as the end goal is met, which is tostick through the budget and not spending into what has been allocated for.
When all is said and done, there is no bettertime to develop good financial habits that will ultimately be beneficial to youand your loved ones around you. Having a good sizable amount of money to curbemergency or rainy day uses beats having plenty of branded handbags or luxurytimepieces around, but with no disposable cash on hand. This is not a situationthat anyone would like to get themselves into, but to always have contingencies and to stash some money away is alwaysuseful for uncertainties that may happen when youleast expect it to.