Smart Money Hacks for 2024

As we step into the final weeks of 2023, it’s time to break free from old financial habits and embrace money-saving strategies that can boost your income and savings.

ALWAYS HAVE A SHOPPING LIST

Heading into a grocery store without a plan can be a recipe for overspending. We’ve all been there, wandering aimlessly and ending up with a cart full of things we didn’t really need. Avoid this by always carrying a shopping list with you. Having a clear plan in place will help you stick to your budget and make wiser purchasing decisions.

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SEPARATE YOUR SAVINGS ACCOUNT

If impulse shopping has been an issue for you in the past, it’s essential to protect your savings from unnecessary spending. Keep your savings in a separate account, entirely distinct from your day-to-day spending. By creating this barrier, you make it more difficult to dip into your savings impulsively, promoting a healthier financial discipline.

MONITOR YOUR EXPENSES

Stay in control of your finances by cultivating a habit of tracking your expenses. Whenever you receive a paycheck, record it in your budget’s income category. Likewise, make sure to log every expenditure, whether it’s filling up your gas tank or treating yourself to a delightful charcuterie night. By keeping a close eye on your spending, you’ll be able to identify areas where you can save and make necessary adjustments to stay on track.

DELETE SHOPPING APPS

Did you know that 4 out of 5 Singaporeans give in to impulse purchases? With 54% of consumers admitting that shopping on mobile devices has led to increased spending, it’s time to take control. Cut down on impulsive buying by removing those shopping apps from your phone. Instead, opt for online shopping from your laptop or desktop where you can be more intentional with your purchases.

PRACTICE MINDFUL BUYING

Before you hit that “buy” button, take a moment to reflect. Ask yourself, “Is this the right time to make this purchase?” Give yourself some space between the desire to buy and actually making the purchase. Set a specific timeframe for consideration; for instance, commit to not checking out for 24 hours or even a few days after adding items to your cart. This simple money hack can be truly game-changing.

REGULAR BUDGET CHECK-INS

Whether you have ambitious financial goals as a family or just want to stay on top of your finances, communication is key. Schedule regular budget check-ins, either on a weekly or monthly basis, and involve everyone responsible for the family’s finances. By doing so, you can make informed decisions, track your progress, and work together towards achieving your financial objectives. Effective communication about family finances is vital, regardless of your specific goals.

CREATE A MINI-BUDGET FOR UNEXPECTED EXPENSES

No matter how well you manage your finances, there will inevitably be times when unexpected expenses arise. Rather than panicking and derailing your entire budget, it’s best to have a plan in place to handle these situations.

Consider creating a microbudget specifically for handling short-term unexpected expenses. Set aside a portion of your savings to serve as an emergency fund. This way, when unexpected costs arise, you can dip into this fund without disrupting your regular budget or long-term financial goals.

AVOID FREQUENT PHONE UPGRADES

Resist the temptation to constantly upgrade your mobile phone just to keep up with others. Telecommunication companies may entice you with appealing upgrade offers, but remember that you’ll end up paying for that phone through your monthly contract. Instead, focus on choosing a phone that meets your needs and holds its value over time, allowing you to save money in the long run.

REMOVE STORED CREDIT CARD INFORMATION

Increase your mindfulness and avoid impulsive online shopping by refraining from storing your credit card details on websites. When you have to enter your credit card information each time you make a purchase, it provides an essential pause to consider if the expense is necessary.

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Additionally, by not saving your details, you reduce the risk of potential hacking and unauthorized access to your accounts. Keep your online shopping experiences deliberate and secure.

Sources: 1,2, 3, & 4

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Benefits & Drawbacks of Using Cash Versus Credit Cards in Singapore

KEY HIGHLIGHTS
a. Paying with cash can encourage mindful spending, as it lacks the convenience that credit cards have.
b. Credit cards have security features and a rewards program, which cash does not have.
c. Interest charges and late payment fees can pile up if you don’t pay off your credit card balance on time.

With the easing of travel restrictions, you are hearing more family and friends discuss their latest holiday plans. Some may even brag about the “free upgrades” they received on flights and hotels by using their credit cards’ miles and accumulated points.

If you are feeling tempted to get a credit card to reap its benefits when you travel, remember to do your own due diligence, and understand the pros and cons of using credit cards versus cash. Both credit cards and cash are widely accepted as payment methods in Singapore. It is imperative that you weigh your options and consider your spending habits, before deciding.

BENEFITS OF USING CREDIT CARDS

#1: UNDENIABLE CONVENIENCE

Credit cards allow you to make purchases without carrying cash, which can be more convenient when you need to make large purchases. You do not need to worry about queues at the ATM, or whether you have enough cash in your wallet. Simply swipe the card anytime and anywhere.

#2: REWARDS AND PROMOTIONS

Many credit cards offer promotions and rewards such as cashback, discounts, and points. You can earn rewards by swiping your card for everyday purchases, which can help you save money in the long run. If you play your cards right, you could be one of those people who fly for “free” due to their air miles redemptions. Imagine boarding the plane and redeeming the staycation of your dreams, without any additional spending on top of your usual expenses!

#3: SECURITY FEATURES

Credit cards come with fraud protection features such as receiving a notification for each transaction. This means that if your card is stolen or used illegally, you won’t be liable for charges. Call the credit card issuer immediately to inform them of any unauthorized transaction. Moreover, you can cancel a credit card if it is lost or stolen.

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In contrast, cash does not give consumer protection against fraud and theft. In the unfortunate event that your wallet is stolen, all the cash inside would certainly be gone.

BENEFITS OF USING CASH

#1: NO FEES

While having a credit card does make purchases in foreign currencies seamless, they tend to come with relatively high foreign exchange fees and unfavorable foreign exchange rates. When you use cash, you do not have to fret about paying fees or interest. Furthermore, some retailers offer devices that are cheaper when purchased in cash.

#2: SPENDING CONTROL

At one point or another, you have probably gone down the rabbit hole of splurging on an item that costs more than your budget. When this happens, sticking to your available cash will be your best bet to stay within your means. Using cash can enable you to track your spending and avoid overspending. With a limited amount of cash in your wallet, you are more likely to think twice before making a purchase.

#3: WIDELY ACCEPTED

While credit cards are widely accepted in Singapore, there are still some places where you can only pay with cash. Small local businesses, hawker centres, or street vendors may opt for cash transactions.

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The choice between credit cards and cash comes down to your financial situation and personal preference. If you value convenience, rewards, and security, a credit card may be a better choice. However, if you prefer mindful spending and avoiding fees and hidden charges, then cash may be the way to go.

Sources:1,2, & 3

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Should you apply for a credit card? Consider these points first

credit cards in Singapore

So, you’re thinking of applying for a credit card?

It’s a decision that should not be taken lightly. Before you fill out that application, take a step back and assess your financial situation.

Are you in a good place to handle another monthly bill? Do you have a plan for how you will pay off your credit card balance each month? Can you afford to pay the annual fee? These are just some of the questions you need to ask yourself before applying for a credit card.

If you can answer yes to all of the questions above, then applying for a credit card may be a good idea. But if there are any lingering doubts or concerns, it might be best to hold off on submitting that application.

Not everyone should apply for a credit card

If you’re not good at managing your finances, then getting a credit card is only going to lead to trouble.

Are you aware of the fees and interest rates that come with credit cards? Many people get blindsided by these charges and end up paying a lot more than they expected.

Also, think about why you’re wanting a credit card. If it’s just to have another form of payment, then there might be better options out there for you. A credit card is only going to serve you right if you use it responsibly.

You should consider these points before applying for a credit card

When you’re considering applying for a credit card, there are a few things you should take into account:

  • Financial history

You should carefully consider your financial history before applying for a credit card.

If you have a history of trouble paying your bills on time, then you’re not ready for a credit card. Take some time to assess your financial habits and your ability to repay your debts. If you’re not sure, it might be best to hold off on applying for a credit card until you’re ready.

  • Spending habits
paying via credit card

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Are you somebody who likes to spend money freely?

If you answered yes, then you should probably avoid applying for a credit card.

The reason being is that you’re more likely to get into debt if you already tend to spend recklessly.

But if you’re cautious with your spending, then a credit card can be a wonderful way to build up your credit score. Just make sure that you’re always paying your bills on time and that you’re not borrowing more money than you can afford to pay back.

  • Debt-to-income ratio

Debt-to-income ratio is simply a measure of how much debt you have compared to how much money you make.

If your debt-to-income ratio is high, that means you’re already struggling to make ends meet. In this case, it’s probably not a good idea to take on more debt by applying for a credit card. You need to get your finances in order before you can be responsible for another monthly payment.

On the other hand, if your debt-to-income ratio is low, that means you have more room to take on more debt. But this doesn’t mean you should go out and apply for every credit card out there! You still need to be mindful of how much credit you’re using and make sure you can afford to pay your bill each month.

Credit cards can be helpful if used correctly

At their core, credit cards are simply a way to borrow money. And like any form of debt, they should be used with caution.

But if you do your research and find the right card for you, credit cards can be a helpful tool for building your credit history and improving your credit score. They can also provide you with some great perks, bonuses, and rewards.

Just be sure to always pay your balance in full each month, and never charge more than you can afford to pay off. That way, you can enjoy the benefits of a credit card without any of the headaches.

As we close, you should not apply for a credit card if you have any of the following characteristics: a low credit score, a spending addiction, or a lack of financial discipline. If you’re responsible with your money and have a good credit score, then a credit card can be a smart way to earn rewards and build your credit history. Just be sure to read the terms and conditions carefully so you know what you’re getting into.

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Having a Credit Card is Not a License to Spend

Convincing yourself that you are not spending real money is easy when you charge for items on your credit card. Technically, you are correct! You are not spending money, in fact, you are borrowing money.

Using your credit card means that you will have to pay the bill eventually. The promise of small minimum payments can entice you into thinking that these purchases are bargains. Unless you pay back the purchase immediately, you will not feel the pain of the bill for another month.

Be responsible with your credit card by treating it like cash and swiping only what you know you can pay back in full. You can reap its benefits by using your credit card in the following situations.

#1: GROWING YOUR REWARD POINTS

Many credit cards provide reward points for certain categories of spending like groceries, gasoline, air fares, and restaurants. When earning thresholds are reached, points can be redeemed for travel, shopping, and more. Choose a card that best suits your spending patterns.

#2: PAYING RECURRING BILLS

As long as you make payments on time, recurring payments will keep that line of credit open so you can continue to maintain or boost your credit score. Any recurring payments you have such as subscription on Spotify or Netflix can be paid through your credit card.

#3: SHIELDING YOU FROM EMERGENCY

Are you ready for unexpected expenses? When this happens, you need some time to cushion the blow. You can use your credit card in case of an emergency, including fixing, changing your tire or repairing a broken window. Be sure to repay more than the minimum on your credit card payments to avoid unnecessary interest.

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#4: SHOPPING ONLINE

Senior Industry Analyst at CreditCards.com once said: “Chip-enabled cards are very good at deterring in-person fraud but that doesn’t help you online, and that’s where most of the fraud has gone.” You can use your credit card when shopping online instead of shopping with your debit card.

Check your browser and shopping apps to ensure that your debit card is not saved on any of these platforms. You can either add your credit card information or delete all your card information to make it harder for you to overspend online.

Sources: 1, 2, & 3

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Hidden Costs of Using Credit Cards in Singapore

You may not be able to pay for items in full cash, but you can certainly swipe your card! Credit cards offer convenience to afford larger purchases anytime. It can also help you establish a good credit history.

However, it is important to understand the actual cost of credit cards when fees and interest are factored in. The actual cost of using a credit card can add up!

#1: THE COST OF PAYING MINIMUM DUE ONLY

There are consequences to only paying the minimum fee. Firstly, it will take longer to eliminate your balance. Secondly, your interest continues to accrue steadily in what you owe. Your minimum payment may not be enough to cover the interest charges for the month.

#2: THE LATE PAYMENT FEES

If the payment is passing your due date, the late payment charges vary by bank. This charge is usually between S$60 to S$80. A late payment may cause you to forfeit some of your credit card rewards or cause your interest rate to spike significantly higher than your regular purchase.

#3: THE COST OF CASH ADVANCE

Did you know that you can use your credit card to withdraw cash through a cash advance? Cash advance on credit cards can be awfully expensive, with interest rates going as high as 30%. You can be charged about 6% of the amount withdrawn per transaction or a minimum of S$15.

Apart from that, you will also receive an interest rate charge of around 28% per annum, subject to compounding if the charges are not repaid in full on the amount withdrawn.

#4: THE COST OF OVERSEAS TRANSACTIONS

These days, more and more people are shopping online using their credit cards. When shopping from an overseas website, it is important to know that there are fees. Two types of fees that can be charged are foreign transaction fee and dynamic currency conversion fee.

#5: THE ANNUAL COSTS

While some annual fees can be waived, others cannot. The next time you receive your credit card statement with the annual fees charged, try calling your bank to ask for a waiver. Doing this may save you more than a hundred dollars!

Image Credits: pixabay.com

Sources: 1 & 2

 

 

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