10 TIPS FOR BETTER FINANCIAL HEALTH
23 March 2020
Do an annual portfolio review with your financial advisor.
Thinking about how to improve your financial position can be daunting. Where to start? What to review? How to plan?
Below are 10 bite-size nuggets to help you get started.
1. Spend Less Than You Earn
No matter how much or how little you are paid, you may find it difficult to get ahead if you spend more than you earn. Prudent cuts to your spending can result in big savings.
2. Stick To A Budget
A budget will show where your money is going. Depending on when you are paid, you may decide on a weekly, fortnightly or monthly budget. You need a budget regardless of how much you earn a year.
3. Pay Off The Credit Card
Credit card debt can be a big obstacle to improving your finances. If you don’t pay off the outstanding balance quickly, you could end up paying more for things than you would have if you paid in cash.
4. The 50/20/30 Budget
This is a proportional guideline that can help you keep your spending in alignment with your savings goals. Some financial experts suggest that living expenses and essentials should be capped at 50%; 20% for funding financial goals like savings and investments; and 30% for flexible spending on wants like movies and travel.
5. Save Your Bonuses
Set aside a portion to reward yourself for working hard, but try to save most of your bonuses.
6. Hospitalization & Surgical Insurance
You have to be accountable for your own health. Be it physical or financial health. Get yourself a comprehensive health insurance plan that covers hospitalization and surgical treatment, critical and terminal illness. Medical cost can be very costly. Pay for a known premium rather than an unknown premium (high medical bills).
7. Mortgage Insurance
If you have an outstanding home loan, it is prudent to buy mortgage insurance to cover you and your family should you face any unfortunate situation.
8. Have A Savings Plan
If you want to boost your savings, you can set aside a minimum of five to 10% of your salary for savings.
If you contribute to CPF and a savings account, and you still have some spare money, then you may want to consider putting it into other investments and get higher returns (6% or more).
10. Power Of Compounding
When you understand the the power of compound interest, long-term investing makes a lot of sense because the amounts will add up rapidly over the years.