How To Budget Your Money Through Tough Times

Let us admit it! One of the biggest challenges that governments are facing right now is how to allocate their budget efficiently in order to fight the COVID-19. While some countries have pledged money to developing testing kits, some have spent money for community disinfecting drones.

The measures that need to be taken in order to stop the spread of the virus such as closing offices and schools or shutting down factories and airlines can lead to some companies going out of business.

Fortunately, Singapore set aside 5.6 billion Singapore dollars in the coming year financial year (April 2020 to March 2021) to help businesses and households tide through the ongoing coronavirus outbreak. This is according to the Minister of Finance, Mr. Heng Swee Keat.

For individuals, this tough situation is what Emergency Funds are for! Budgeting your spending can help you find a balance between spending and saving money throughout this period.

CONTROL YOUR SPENDING

The rise of credit cards and online banking apps paved the way for better shopping experiences. The extent to which we fall trap to these temptations boils down to our willpower. During these times of scarcity, you need to focus on the things you want rather than what you need. It is easier said than done as self-control is like a muscle that gets strained due to overuse.

It is the willpower of those who face repeated difficult financial situations that tends to deplete the most. Hence, it is important to seek the help of someone who cares. Seek professional advise, if necessary.

PLAN YOUR MEALS

One of the easiest ways to control your spending is to plan ahead. Meal planning can help you stay within the budget and control your visits to the grocery. For those who are practicing social distancing and are opting to stay at home, a meal plan is your best-friend!

If you know what you are going to consume for a week or a month and have shopped accordingly, there will be no need for extra store visits that will lead to more spending and more food wastage. Allot a specific portion of your budget for weekly meal plans.

PRIORITIZE YOUR SPENDING

Each of your expenses should be placed in appropriate budget categories such as food, toiletries, and utilities. When faced with a decision to see what gets paid this month and what gets the least portion of the budget, it is important to prioritize. Essentials go up the ladder! These are followed by your creditors and your non-essentials.

You need to accept the situation you are in. Expenses that are core to your survival should be prioritized. The rest can wait.

CUT DOWN YOUR SPENDING

One of the major things you can do to help yourself and your budget during these tough times is to figure out what you are currently spending on and what you can live without. Whether you are cutting down your monthly cable bill or reducing your trips to Starbucks, there are various ways to reduce your expenses. I am referring to little unnecessary expenses that tend to pile up.

It is best to know where your money goes. If you are using a debit card, keep track of the payments. If you are using cash, keep the receipts and review them. Watch out where your money goes and adjust accordingly.

STAY POSITIVE

In times like this, all we can do is to hope for a better future. Staying positive can help lift your mood throughout a bad situation. As bills come in and your debt continues to increase, keeping a positive mindset with a strategic plan can help you.

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Remember that what you are going through is temporary and will not last forever. We can get through the setbacks brought by COVID-19!

Sources: 1 & 2

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4 Money Moves To Take On Your 20s

On your 20s, you will encounter a myriad of firsts. From earning your first full-time job to surviving your first failure, your early experiences shape who you become in the future. Your major accomplishments and significant failures are your best teachers.

You will become more independent and responsible as time passed. You will begin to live on your own, to solve your own problems, and to budget your own finances. Hence, it is important to take the following money moves as early as now.

MONEY MOVES #1: MAKING QUALITY PURCHASES

Living in the modern generation where everything is handed with significant convenience, you can buy anything you want with a few taps or clicks. It is tempting to bite into every online promotions or group deals available. However, you need to survive these temptations to make good decisions.

Identify your financial goals and work towards it. You may succumb to your wants from time to time, but you are the only one who can recognize what is important. Invest on things that have a greater value in the future.

MONEY MOVES #2: CREATING A BUDGET

As a young adult, it may be your first time to dissociate yourself financially from your parents. Your independence comes with the responsibility to understand what comes in and what comes out from your pockets. You can either go the old-school route through journalling or the digital route through Excel or budgeting tools. Do whichever feels more comfortable to you. Leave some money for your unexpected and recreational expenses.

What if you are romantically involved with someone? With love and care comes the acts of service. You may choose to spend money for your beloved and that will open another expense category. It is up to you to allocate how much you want for your dating budget.

MONEY MOVES #3: SAVING AND INVESTING

Time is of the essence. There is no perfect time to save and invest than right now. Let your budget direct you to how much you can save each month. It is recommended to save at least one-third of your income. This way, you can cushion unexpected expenses brought by sudden life changes. Do not get me started about layoffs and home repairs!

As for investing, you may consider maximizing your contributions to your CPF account. You will reap what you sow.

MONEY MOVES #4: OPEN TWO BANK ACCOUNTS

As a responsible young adult, you may open two bank accounts. One account can handle your operations and the other can handle your reserves. By operations, I am referring to the money you will spend for your everyday needs. Money from your operational account can be used to pay for your bills and daily purchases.

While, the reserve account can be used to secure your savings. It is the account that can help you reach your financial goals.

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BOTTOMLINE

When everything is said and done, you want to take advantage of the time you have now. Make smart choices as you will reap its benefits later in life. However, do not forget to live a little. You work for a reason – to a live a pleasant life. Do not forget to reward yourself for all the hard-work you have been

Sources: 1 & 2

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5 Things To Consider When Switching Banks

Before you finalize your switch from one bank to another, ensure that you understand what you are signing up for. Here are five questions you need to answer before you decide.

DO YOU WANT A HIGHER SAVINGS ACCOUNT INTEREST RATE?

You get what you think you deserve. If you are earning nearly nothing in your savings account then, it is worth evaluating the alternatives. Moving your funds elsewhere makes sense only when you can earn significantly more in another account.

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For instance, switching might not be worth the trouble in this scenario. Say you only have around S$1,000 in your savings account and the extra 0.5% interest gets you about S$5 additional on your monthly total. If you are generally satisfied with your current bank, why bother?

DO YOU WANT TO SIMPLIFY YOUR FINANCES?

Some Singaporeans have accumulated multiple accounts over the years. So? Switching banks can be an opportunity to organize your finances. Organizing your finances allows you to minimize your online bank account and to move your money as quickly as possible. Have everything in one place by choosing a premium bank.

This bank must cater to all your deposit needs, offer low fees, and provide competitive interest-bearing accounts.

DO YOU PREFER TO HAVE AN UPGRADE IN ONLINE AND MOBILE BANKING?

Whether you want to acquire DBS Paylah! or UOB Mighty, most banks offer online and mobile banking tools to smoothen your transactions. You may consider all these tools as a means to weigh whether you watch to switch banks or not. Contemplate on the features you need and the ones that are available thru your chosen banks.

If you often transfer funds between a local and an overseas account. Then? You have to find an online banking app that enables you to do this. Take note of the charges that come with every deposit.

DO YOU WANT A BETTER CUSTOMER SERVICE?

How is the bank personnel treating you after you sign-up? Dissatisfied customers may receive better service in another bank. Look for online reviews and friend recommendations when reviewing a bank’s customer service prowess.

It is best to talk to someone credible to assess their issues in the bank staff and service.

DO YOU PREFER A BANK WITH BRANCHES NEARBY?

Accessibility is important when considering which bank to choose. You must survey the nearby banks and notice which ones are more accessible. You may also walk up to the teller to ask about their safe deposit box or their online banking tools.

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Who knows? Your chosen bank may allow you to transfer or deposit funds with a few swipes of the finger!

Sources: 1 & 2

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6 Financial Resolutions For Every Singaporean

As I receive my annual bank statements and credit card summaries, I realize how my financial year went by. January is a fantastic time to review your financial strengths and weaknesses. Where did you fall short? Not only is it a good way to reflect on your spending habits, but it is also a good way to craft your financial goals.

Use your year-end resources to establish your financial resolutions for the year 2020!

1: IDENTIFY YOUR FINANCIAL GOALS

Several articles from Money Digest highlighted how helpful it is to determine your financial goals. Start your journey by identifying both your short-term and your long-term financial goals. Are you hoping to earn a degree or to expand your retirement fund? Do you see yourself purchasing a new flat with your spouse? Or, do you want a to lead a different career?

To illustrate your path in a detailed manner, you may create a Financial Vision Board. Take some time to think about how to achieve your financial goals this year. Consider your outlook before your plan of attack.

2: SAVE MORE MONEY

How many times have you heard about “saving more money” as a resolution? This is a common financial resolution for many Singaporeans. However, most people do not know how to start. It is recommended to be specific to increase the chances of success. Increase the percentage of your monthly income that goes into your savings.

Save at least 15% or your monthly income and increase the percentage whenever you feel more comfortable. If you are already saving 20% of your income then, you are in good place. A person who is earning S$4,000 per month can reap the benefits of having S$9,600 by the end of the year. Raising the percentage to 30% will equate to having S$14,400 by December 2020. Saving more money gets you closer to achieving your financial goals.

3: PAY OFF YOUR DEBTS IN FULL

Two years ago, MAS estimated that there are 9 million credit cards in circulation in Singapore, with Singaporeans charging an average of S$555 per card. Imagine how much these numbers have grown since? Credit card debt is rising in the country as convenience is hard to resist.

Many credit card holders enjoy the attractive benefits or the good rewards programs of several issuers. While there is nothing wrong with paying using cashless methods, you need to be responsible with paying the hefty interest rates and balances. Commit to paying the full amount of your monthly debts this 2020!

4: GROW YOUR INVESTMENTS

Aside from increasing your savings, you can make your money work for you by investing each month. There are many ways to invest your money such as putting it in high-interest savings account. This can increase your earnings by 2% per annum.

Another approach is to sign-up for investment-linked insurance policy where a portion of your premiums will be invested in specific investment funds. Review your insurance policies and ask your financial adviser about this option.

5: GO ON A CASH-ONLY DIET

You have endured the back-to-back expenses brought by the Holiday season. Chances are, your credit card got exhausted due to the year-end sales and other Christmastime delights you spent for your beloved ones.

Cushion these expenses by going on a “cash-only” diet for a few weeks or a couple of months. Begin by allocating a monthly budget based on the money you have. Give yourself a specific cash amount per week and work your way around it. Doing this will challenge your self-control and your resourcefulness.

6: AUTOMATE YOUR SAVINGS

Transform your new year enthusiasm into something productive by automating your savings. Commit to this new habit by researching on the available services of the local bank institutions. For instance, I recently came across with the UOB Stash Account.

UOB Stash Account allows you to accumulate your savings for up up to 1% p.a. interest, simply by maintaining or increasing your previous month’s Monthly Average Balance. An initial deposit of S$1,000 is needed to open the account, which is open for all. You can apply for your Stash Account and get an approval within minutes by simply going to the website. Terms and conditions apply.

Sources: 1 & 2

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How To Set Better Financial Boundaries

Establishing boundaries is important in living a happier and healthier life. For starters, boundaries can help you protect yourself from emotionally draining people or help you build stronger relationships. Limitations are also vital in creating professional relationships founded by efficiency and awareness.

However, there is one area in our lives that some are not so keen to establish. I am referring to the financial boundaries. It is easy to overstep our own financial boundaries and keep making mistakes that will hurt our goals in the long run.

KEEP THINGS HEALTHY

Restrictions go hand-in-hand with creating boundaries. These are most evident in creating a budget. Use this budget to work around your spending, but you have to be gentle with yourself.

Avoid having too many restrictions as you may torment yourself in the process. Holding on to an impossible budgeting standard can lead you to falling off the wagon.

INCREASE YOUR AWARENESS

Everyone makes mistakes. When it comes to finances, I learned this the hard way! Do not get me started with setting up financial limits while traveling! What is important is that I learn from these experiences.

You need an honest and nonjudgmental reflection whenever you cross a financial boundary. Otherwise, hiding your mistakes increases the likelihood of it happening again.

Abraham Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the ax.” This is exactly what time spent reflecting on your life is. You need to sharpen the ax in the decision-making process of your financial journey.

GET PROFESSIONAL HELP

Let us face it! Setting up financial boundaries can be tough. This is why some people seek the help of their partners, their trusted friends, or their financial planners. Having a financial planner can help you to make sound decisions with a goal in mind.

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Furthermore, there are several financial planners in Singapore. Make your life easier by searching thru the financial planner directory of Financial Planning Association of Singapore (FPAS). It is a non-profit association dedicated to promoting unbiased financial advice to the Singaporean public.

Sources: 1 & 2

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