Let’s face it, with credit cards, internet shopping, and many venues for fun, keeping your finances in check can be challenging. But, beware, things can very quickly get out of hand.
Here are some signs that you should take a closer look at your bank accounts and learn to keep your wallet in your pocket.
We live in a world where the places you are seen at and the people you are seen with count. Sometimes you have to connect with these groups outside of work – if they are people you actually do like, all the better. On the downside, this means that you will get invited to parties and fun (read: sometimes expensive) outings.
What You Can Do: Take stock of your finances before you decide to hit the club or the fancy new restaurant down the street. There’s no shame in telling your friends that you can’t afford something. Just remember to do it without sounding like you are making excuses or end up guilt-tripping your friends into feeling that they have to help you financially. It’s simply not in your “partying” budget for the month. Do not let your FOMO force you to spend your hard-earned money.
Ideally, you should be able to pay off your credit card bill in full each month and still have surplus. If you find yourself repeatedly having to leave a balance in your monthly bill, it’s probably time to cut up that card and switch to cash.
What you can do: Start spending less and also start bringing cash instead of the plastic card – that got you into this mess in the first place – until you are able to clear off your bill completely. Don’t fall a prey to rewards and points that push you to spend more.
“Saving money for a rainy day”- as cliched as that sounds is one of the most important financial concepts that any responsible person should know. Medical emergencies and sudden financial problems can deal a huge blow to your bank statement. Six to nine months of savings for expenses such as electricity and food are basic to maintain financial stability. If you find that you are not able to set aside even 5 per cent every month, you might be living well beyond your means.
What You Can Do: Put a conscious focus on saving every month. Spending less each month on unnecessary things is the first step you can take in the right direction. Prioritise your monthly spending to more on a “need” basis than “want” – including your cable bills and mobile plans. In time you will realise how good your money looks in your bank account rather than spent on unnecessary things.
Cars are a very big investment for an adult, but can sometimes be a necessary one. Do not lease a car you cannot afford – getting the newest Jaguar when what you really need and can afford is a Prius can cause a huge dent in your expenses. Ideally, your monthly car payment should not be more than 10 per cent of your monthly salary – remember you are other incidentals to account for as well.
What You Can Do: The answer to this problem is pretty simple: you do not need a luxury car to get to work every day. Better yet, ask yourself if you even really need a car of your own – Singapore is thankfully very well connected – unless you are talking family and elders’ convenience. This is also good because you can help cut carbon emissions and save the environment.
Don’t have a home loan yet and yet more than half your salary goes towards loans? You also find yourself borrowing money to make ends meet. Sure, emergencies can happen that would require you to get some quick cash from a relative or close friend. That’s understandable. But that’s a red flag especially if you do not have a home loan yet.
What You Can Do: Take a good look at your expenses. Be honest with yourself and isolate the biggest drain on your finances and go on a one-month detox. If you can live without something for a month, chances are you don’t need it.
Ever in a situation when friends who earn the same as you or even more than you not being able to afford as much as you can? Not travel as much, eat out at expensive restaurants as much? Before you congratulate yourself , take a step back to think of the real reasons behind it. It’s possible that they have commitments (read: home loans, investment payments…). So while they are saving and investing, you are likely blowing your excess cash on hobbies.The tables could very easily turn in 5 to 10 years to come.
What You Can Do: Start talking to a finance agent about retirement. Start small but think long term saving.
READ MORE:
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Text: Sandhya Mahadevan / Additional reporting: The New Savvy / Photos: 123rf, Pixabay