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You Must Put These Items In Your Financial Bucket List

Tandem skydiving in Miami…check! Owning a car…check! Climbing Mount Kinabalu…check! Scuba diving the Great Barrier Reef…check!

These statements are just some of the items that you can put in your bucket list. Most of these do not come cheap! Hence, you must ignite your passion for getting your finances in order. Add items that will relate to achieving the bigger financial picture. Here are just some that I can suggest:

1. DIMINISH YOUR CREDIT CARD DEBT

Instead of wishing for a million dollars in your savings, it will be easier to pay off your credit card debt. Numerous personal finance experts advocate making a “list of debt” and starting with the highest interest rate. Afterwards, the person shall focus on the rest. This can be effective in the long run.

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However, using the “snowball strategy” can be effective too. This involves eliminating all the smallest items first before working your way to the highest items. After all, the most important thing is to pay more than the minimum.

2. HAVE A SUFFICIENT EMERGENCY FUND

How many times have you read an article that discusses about the mere purpose of having an emergency fund? Too many to mention, right? For individuals who are trying to turn their finances around, saving up a sufficient emergency fund is a milestone that is worthy of celebration.

Re-frame your thoughts and peek into the future! If you have plenty of wealth to tap, you can finance a trip to Australia or other items in your bucket list.

3. SAVE FOR A 7-DAY VACATION

Requesting for a significant time away from work can be difficult to sell to your employer. But, you can argue that taking a week-long vacation can rejuvenate your mind and body. Taking care of your wellbeing will make you more productive at work.

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Remember that you will likely need to achieve many other goals on your financial bucket list before taking a sabbatical. These other goals include paying off debt and setting an emergency fund.

Sources: 1, 2, & 3

4 Times Your Parents Were Right About Money

Like most parents, mine were fond of imparting nuggets of wisdom to us. Whether we like it or not, we have to listen to the Hallmark-worthy quotes for every occasion. Be honest! How many times did you roll your eyes on your mother or father as they scold you in front of your friends?

Well, it turns out that some of their financial lessons are beneficial. You can either learn from their successful stories or their wrongful moves. With that said, here are “4 Times Your Parents Were Right About Money”:

DO NOT PUT ALL YOUR EGGS IN ONE BASKET

This statement does not refer to organizing your grocery items. Instead, it refers to the piece of advice that argue against putting your resources in one object or individual. My parents were right when they told me to embrace all the job opportunities while I am still young.

The technical term for this act is diversification. Not diversifying has its drawbacks. Diversification, according to Nobel Prize winner in economics Harry Markowitz, lowers the risk of loss and increases the chances for success when investing. You may apply diversification in other aspects of your life.

For instance, avoid pouring yourself to the workplace as you may neglect your physical health and emotional sanity. In friendships, you must devote your time to several people to create a personal support system or a business network.

MONEY DOES NOT GROW ON TREES

“Money does not grow on trees!”, exclaimed my father. I cannot recall how many times these happened to me as a child (who just wants to collect Barbie dolls). Oh! Hearing these words translated to our mother tongue had a stronger impact. I am sure that some of you had the same experience. As you read these words, your parents’ voices may echo in your head. You are not alone.

The idea of quick and easy cash may appeal to most of us during our childhood, but the real world does not work like that. Earning money takes determination, time, and effort. This is why you must not waste your money on things that you do not need. Teach the value of money to new generations as well.

Furthermore, it is practical to establish your own emergency fund should an unexpected event arise. Consider this “Clever Ways To Build A Sufficient Emergency Fund“ article as a guide.

SPEND WITHIN OR LESS THAN YOUR MEANS

Spending within or less than the bounds of what you can afford can contribute to a stress-free life. I know this lesson sounds utterly obvious. However, some people do not understand the principles of cash flow. A number of Singaporeans are not afraid to whip out their credit cards to buy items that they cannot afford at the moment.

My cousin’s parents understand the prowess of a credit card. So, they did not allow their child to get one. You see, they believed that it is not a good idea to purchase something when you do not have enough cash in the bank to afford it. My cousin has to keep saving money until he could afford the thing that he desires.

You may argue that you cannot shop online without a credit card, but you can use a MasterCard or a Visa debit card. Spending wisely is a good practice to impart to your future children.

PATIENCE IS A VIRTUE

My mother is patience personified! Her actions taught that overcoming instant gratification is important to financial success. Impatience costs people cold hard cash.

If you are willing to wait instead of purchasing immediately, you are able to compare prices within other shops and to find cheaper options. Practicing patience gives you the opportunity to wait for the greatest sales, huge markdowns, and bargain deals that will help you save a lot.

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There are many ways to improve this virtue. You may employ breathing techniques or visualize how long you will wait while in a queue.

Sources: 1 &2

How To Spoil Your Wealth As A Singaporean Millennial

Prove how wrong the older generations are! Being relatively young does not necessarily equate to ignorance and carelessness. Exude financial readiness by avoiding these scenarios:

BY BEING TOO CONSERVATIVE

Millennials have a distinct currency that many people cannot afford to lose – time. The more time you have, the more powerful the compound interest is. The only problem is that many Millennials are too risk averse. Why is this so?

Well, they had experienced at least two financial crises in the course of their life. Recall the great recession of 2008. The downfall of the economy in United States contributed to the ripple effects that stressed the Singapore economy. It was the first East Asian country to succumb into recession.

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Despite these events, it is important to focus on your long-term plan before you retire. Consider investing in stocks and take advantage of it over time. Failing to invest may cause you to have an insufficient fund during your golden years.

BY COLLECTING PASSPORT STAMPS

It is no secret that many Singaporean Millennials are globetrotters. Collecting passport stamps is not a cheap hobby! This is why some of them take up part-time jobs in order to finance their passion for travelling.

The places to explore in our humble island may be limited, but there is no shortage of things to spend on. Some Millennials waste their money on the frequent trips to the themed restaurants or hippie cafes. While, others spend their paycheck on bargain hunting. Notice the flashy “sale” signs in Orchard Road. These are very tempting, if you ask me. It is only later that they realize the essence of cutting back.

BY FAILING TO PLAN FOR THE FUTURE

Knowing the facts on young Singaporeans and retirement may trigger anxiety. It is alarming how many people hold their retirement plans due to fulfilling short-term goals such as purchasing a nice car or creating a fantastic wedding. Not to mention, there are numerous reports that highlight how poor the retirement readiness of Singaporeans are. A 2016 survey showed that 1 in 3 working citizens were not planning for retirement at all!

Just because you are young does not mean that you can put off your plans for the future. Do not solely rely on your CPF account to cushion your foreseen expenses. Start your retirement fund as early as your first paycheck.

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The bottom line is to keep your finances simple by focusing on saving your excess money and earning more cash. Planning for a comfortable lifestyle is crucial too!

Sources: 1 & 2

Answering Five Awkward Questions About Money

How often do you have a chance encounter with a person who is innately savvy with money? Not so often, right?

Personal finance is not exactly a part of the school’s curriculum. This is why you must be open to discussing about proper money management. No matter how embarrassed you may feel, here are some questions that many Singaporeans are eager to know.

#1: HOW CAN I MAXIMIZE MY SAVINGS DESPITE LIVING FROM PAYCHECK TO PAYCHECK?

Tackling the overwhelming bills and loans can make you unenthusiastic about saving money. You see, it is difficult to save money if you are barely living from paycheck to paycheck. The solution could be found in the way you spend.

Notice how you allocate your monthly budget and look for ways to downsize your purchases. You may focus on entertainment costs such as limiting your restaurant dining. Strategically planning your spending habits will help you to increase your savings.

#2: WHICH FUND SHOULD YOU SET FIRST: RETIREMENT OR EMERGENCY?

Financial security places a heavy weight on both the emergency and the retirement fund. The former aims to protect you against unexpected events in the immediate future. While, the latter will cover your expenses in the golden years. Stop choosing between these two! Cultivate varying amounts in your emergency and retirement fund simultaneously.

Once you are done with setting up a sufficient emergency fund, you can start stretching out your contribution for your CPF OA.

#3: WHY WAS MY PLASTIC CARD DECLINED?

There is nothing worse than having a sales clerk or a waiter tell you that your credit or debit card has been declined. I can only imagine the horror on the client’s face as this happened to me before. Several years ago, I was working as an administrative officer at a fitness studio. A rising Hollywood celebrity came to pay but her credit cards got declined. She was furious at me and gave her debit card instead. Thankfully, the transaction was successful. I must highlight that she is using plastic cards from international institutions.

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Why did this happen to the rising starlet? Well, it may be due to the bank’s security measures. Purchases made far from your home may seem like red flags to your issuer. So, call your bank or issuer right away and authorize the transactions. Handle this situation better by keeping your cool. Talk to the personnel privately and arrange an alternative form of payment such as going to the nearest Automated Teller Machine (ATM) to withdraw cash.

#4: HOW DO I TELL MY PARTNER ABOUT MY OUTSTANDING DEBT?

Telling your partner or future spouse about your outstanding debt fuels anxiety, but you must simply do it. Schedule an open discussion with your beloved. Explain the gravity of the situation and the events that led up to it. Highlight what you learned from your past mistakes and show how you can conquer your debt.

Do not forget to include your partner in the planning process.

#5: WHEN SHALL I STOP ADDING INTO MY SAVINGS ACCOUNT?

As a conservative adult, you had exhausted all your contributions for your future. Congratulations on meeting your short-term financial goals too! Now, you may wonder if you are putting too much on your savings account.

Limiting yourself to a savings account makes you miss the opportunities of growing your wealth to its fullest potential. Consider opening an investment account once your emergency fund, retirement fund, and living expenses are in order. You may even schedule a consultation from a financial expert.

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It is rare to encounter a person who is innately financially savvy. So, serve as a good example to other Singaporeans by raising important money discussions.

Sources: 1 & 2

How Much Cash Should You Keep In The Bank?

You are a responsible adult living in the most expensive city in the world. With this in mind, how much money should you have in your savings account? This may sound like a basic financial query, but it is hard to extract a straight answer from it. Make things simple by aligning your goals with the volume of your savings.

Here are just some goals that you may tap with:

GOAL #1: BUILDING A SAFE NEST FOR THE GOLDEN YEARS

To shed a light to the path of many Singaporean retirees, a social security savings plan has been put into place. This savings plan is none other than the comprehensive Central Provident Fund (CPF). You can use your CPF Ordinary Savings account for important purposes such as purchasing an HDB flat or financing your retirement years.

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The amount of your retirement fund must be based on your estimated future spending or your predicted lifestyle. This is why it is challenging to quantify a singular retirement fund. It is best to save on a regular basis with the knowledge that all will add up as you age. For instance, many financial experts recommend to save at least “10% to 15% of your income for retirement as early as your 20s“.

GOAL #2: ESTABLISHING A REALISTIC EMERGENCY CUSHION

As the name suggests, an emergency fund is established to cushion unforeseen events. There are many ways to arrive at a specific amount for an emergency fund. First, you may follow the advice of the renowned Personal Finance Adviser Suze Orman. She suggests to have eight months’ worth of your salary because it is the average period before a person finds a job.

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Second, you may save up a five-figure emergency fund in an investment account with relatively safe allocations in order for it to grow. Doing so will allow you to save more money than by leaving your cash in a savings account.

Lastly, you may save up based on your living expenses. Add up the cost of all your current essentials (i.e., rent, grocery, and utilities) and work from there. For example, you need S$2,000 per month to survive. Prioritize getting about S$6,000 in your emergency fund.

GOAL #3: CONQUERING SHORT-TERM VICTORIES

In a list of financial priorities, chances are, your specific goals reside at the bottom. Specific goals include purchasing a car, backpacking around Europe, and buying a new phone. Do not limit your savings just to suit your specific goals.

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Remember that starting your savings is the initial step and that you must plan to raise it over time.

Sources: 1 & 2

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