Time really flies! It seems like just 2 weeks ago that we were celebrating New Year but the year is already going into April. How are you keeping up with your New Year resolutions or have they been thrown out long ago? If you haven’t gotten around to saving much due to the festivities and school holidays, fret not, because it’s not too late to start!
Here, we provide a guide for you to take 1 small step per month in helping you make measured progress towards a better financial status.
Month 1 – Track all your expenses
The first step to making any financial progress is to assess your current situation, and there’s no better way than to start by tracking your expenses. This may sound tedious to some, as you may be using a variety of ways to pay for everything – GIRO, cash, credit cards, Paywave.. etc.
You can either opt for the manual effort, which is to collect receipts, or choose to automate some of your fixed expenses with Giro payments so that you only need to track one bill at the end of the month. After you’ve collected all these data, split them into a few big categories such as utility, food, transport, telco, entertainment and shopping. This can give you a better idea of how much of your monthly income you are spending on each category.
Month 2- Trim your expenses by 30 percent
If you do not foresee a pay rise in the coming months, the other viable option is to spend less. By tracking your expense, you can now have a better idea of where you are over-spending and which areas you can cut down on. For instance, you might be spending close to $800 on food per month, and tend to have at least 2 restaurant meals every week. Is it possible to but the expenses here down to $600 a month and eat at hawker centres and food court mostly?
30% is a subjective figure, and those who are earning less might find it difficult. Aim to save at least 10% to 20% of your monthly income as a minimum to help you build up your war chest.
Month 3 – Create a budget
Having a clear idea of how much you are spending also means you can now lay down tangible limits to each category of spending. Create this budget and try your best to keep to it on a monthly basis.
Month 4 – Reduce your existing interest rates
Having outstanding loans that charge monthly interest can quickly drain your money without you realizing it. Do you have any outstanding loans that you can repay now? If not, are there ways to get lower interest rates? For instance, those who owe several credit card debts might want to look for a consolidation loan that can consolidate their debts into one at a lower rate. The same goes for home loans where refinancing can help to save you thousands of dollars in the long run. It may seem like a hassle at first but all this effort will help you save a substantial amount of money.
Month 5 – Sell your unwanted items
Do you have too many clothes in your closet that you no longer wear? A kitchen stocked with gadgets and plates that you only use once a year? A quick way to declutter and earn some cash at the same time is to sell these unwanted items! The sale price may look small to you but they can accumulate to a large amount! What’s more, you are doing Mother Earth a favour!
Month 6 – Get sufficient insurance coverage
When cutting cost, many people tend to scrimp on buying insurance because they see it as an unnecessary expense. Yet, you might regret it very much if you fell ill and you are not covered by the appropriate insurance. Healthcare costs are expensive in Singapore, especially if an operation or hospital stay is required. Protect yourself with an essential insurance at the very least, so that you will not have to worry about the finances when your health isn’t at its best.
Month 7 – Take on a part-time job
If you’ve got a job which allows you to leave on time and not worry too much about working over the weekends, consider taking a part-time job to increase your salary. If you already hold a full-time job, find a part-time job that gives you a higher hourly rate rather than having to work long hours so that you do not tire yourself out. Some ideas include teaching private tuition, providing online services such as designing/content writing or even becoming a private-hire driver if you already own a car.
Month 8 – Shop smart
When cutting expenses, it is unrealistic to tell yourself that you will not shop at all. Life becomes miserable if you are restricting yourself all the time. The way to do this is to set a budget aside every month and shop smart at the same time. Take for instance, if you are just moving into your new home and will be spending a substantial amount on home furnishings, it will be wise to spread out the cost over a few months with an interest-free instalment plan. Check out the many products listed here that come with zero-interest instalment plans that can better help you manage your cash flow.
Follow these 8 steps month-by-month and share with us how your journey towards better financial health went!