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6 Simple Ways To Organize Your Finances Now

In a sea of bills and taxes, its huge waves may drown one. Building a strong money boat to hold you and your finances together through organization is the key. Organizing your personal finances enables you to save more money and time. Start with these simple ways:

1. KEEP TRACK OF YOUR FINANCES DIGITALLY

Firstly, you must be aware of your spending patterns and exactly how much you are spending per month and per annum. A surefire way to organize your personal finances is to keep track of it by using a Smartphone App or computer software. Find the perfect (and Free) money management app for you here. Or, download reliable money management software called Money Dance or Mint. These digital tools will help you decide how much you shall save and help you to highlight the unnecessary expenses.

2. DESIGNATE A PLACE FOR BILLS

Never forget where you put the bills or what their due dates are by designating one place for them. Some bills arrive by electronic mail while some arrive by postal mail. You have to decide whether you are going to file all your bills in a tangible box or in a computer folder. For physical storage of bills, you may purchase the S$0.90 PAPPIS brown box from IKEA that is created to hold A4 size papers. Label the box accordingly and keep it in a safe place. While for virtual storage of bills, make scanned copies of those that arrive in the mail and put them into a labeled folder in your computer or laptop.

3. PREPARE FOR YOUR BILLS

At the beginning of the month, make a list of the bills you are expecting to receive. Put it on your working desk or create a file for it. This way, you will not pay a bill twice even if you received it simultaneously by e-mail and postal mail.

4. PAY THE BILLS IMMEDIATELY

Always charged for late payment? Try paying bills immediately. Since you are prepared for the bills earlier on, you may have available money in the bank to pay it the same day as you received it. If you have automatic payment scheduled and you still received a billing statement, call your bank or creditor.

5. CUT DOWN THE NUMBER OF YOUR FINANCIAL ACCOUNTS

In a world filled with a certain bank account card for all your needs, most people have several number of financial accounts. The complication starts when the credit card for travel, for petrol, and for shopping bills at the same time. Also, you may have different bank accounts for higher interest, minimal fees, and rebates. More than being complicated, the constant shuffling between these accounts can get messy. This is why you must reduce the number of your accounts.

6. SET REALISTIC FINANCIAL GOALS

Develop a habit of financial goal setting to know where you are going and to plan how you can get there. Write down your financial goals with a trusted witness and contemplate the monetary milestone you would like to accomplish in the next 2 to 5 years. Track down your monthly progress.

Image Credits: pixabay.com (License: CC0 Public Domain)

Sources: 1 & 2

Plan For Your Retirement In These Upcoming CPF Roadshows

Are you prepared for what the future holds?

Many of us who have just started joining the workforce have the notion that that saving for retirement can start in later years and the main priority is to focus on current needs and wants such as upgrading to a nicer home, getting a new car and travelling once a month.

The hard truth, however, will eventually catch up with us when we are in our 40s and 50s when we realised that our retirement savings is hardly enough to provide for our long term needs.

There is never a “good” time to start planning for our retirement. But there are advantages to starting early. If you start early, you will have a longer time horizon and that means more time to grow your savings. If you have made investments, a long term horizon will also help to ride out short-term price fluctuations on your investments.

But, if you start late, you will have to work harder at growing your retirement savings. If you cannot afford to lose money, you should avoid investments that come with higher risks. You may even need to think of delaying retirement provided you remain employable. – MoneySense.gov.sg

Unsure of how to plan for your retirement? Visit the upcoming roadshows organised by The Central Provident Fund Board (CPFB) to pick up insightful tips.

Event Date	Event Time	Venue
28 to 30 August 2015	11:00AM to 06:00PM	Bedok Mall
13 September 2015	11:00AM to 06:00PM	Toa Payoh HDB Hub
10 October 2015	11:00AM to 06:00PM	Jurong Point
31 October 2015	11:00AM to 06:00PM	Ang Mo Kio Center Stage
14 November 2015	11:00AM to 06:00PM	Braddell Heights Community Hub

Hear from celebrity and entrepreneur Irene Ang and financial expert Christopher Tan, CEO of a financial advisory firm as they discuss retirement planning. Win prizes at various game booths when you test your financial knowledge too!

Visit www.cpf-bigrchat.sg to find out more

For enquiries on the roadshows, please email the organiser at [email protected]

5 Helpful Steps To Talk To Your Elderly Parents About Money

Money gives people, of all ages, the decision-making opportunities they need. Unfortunately for elderly parents, research has shown that financial decision-making ability declines after age 53. This maybe attributed to the 2013 survey done by National Endowment for Financial Education which found that 7 out of 10 adults have difficulty discussing to their families about who will make the financial decisions on behalf of their elderly family member.

Talking about the aging parents’ finances is a good idea but that does not mean people actually do it. Some people avoid the subject because it raises uneasy situations (e.g., quarreling over the estates or feeling “extra” sensitive toward the elderly). Resolving this negative mindset will help your aging parents to organize their financial life. And, that is the most important thing right now.

So, here are 5 Helpful Steps To Talk To Your Elderly Parents About Money…

1. DO YOUR RESEARCH

You have one goal – to organize your elderly parents’ financial life. Know what issues or topics to discuss that will aid this goal. Due to the declines in someone’s body as they age, topping the list is healthcare. Also, you must consider their life insurance, medical insurance, or long-term care coverage policies. Then, talk about estate and other assets. Having a last will and testament ready is a crucial thing.

2. GATHER DATA

After researching the topics to discuss, you must prepare the documents needed. These documents are the banking statements, credit card bills, tax records, insurance policies, and so on. Put these documents in one safe place such as a relatively small safe deposit box at home. Grant access only to the people who are really trusted (e.g., the lawyer or immediate family member).

3. CONVERSE TO THEM STRATEGICALLY

Before talking to your parents, build a strategy that will work for your family dynamics. For instance, some families are more comfortable with having everyone around while other feel that they are being ganged up by their children. Another tip is to talk to them as if you are talking to your adult peers with objectivity and compassion. Do not make them feel that you are treating them as young children.

4. START THE DISCUSSION

All your homework led you to this moment. Emphasize on the benefits of the talk and speak with love. Delaying the talk will only be more expensive because as health declines, premium prices increase. Ease the flow of the conversation by adding real-life experiences as examples.

Image Credits: pixabay.com (License: CC0 Public Domain)

5. LEARN FROM THE EXPERIENCE

Traditional financial advisors suggest that parents save for their own retirement first before saving for tertiary education. This is because you only have one shot at retirement while there are many ways to get student loans. With this experience, you must realize that it is necessary to save as much as you can for retirement during your peak years (i.e., aged 20-35) in order to age gracefully.

Sources: 1 & 2

What Is Debt Check And How Do You Make It Healthy?

Debt is the amount of money borrowers by an individual or a corporation used to make huge purchases that they cannot afford under the normal circumstances. Pay this debt in a later date and you would get fined with interest! As of June 2015, the total card billings in Singapore amount to S$3,980,000.40 million! If you do not owe anybody now then, good job! You can start browsing our other articles and enjoy your debtless life. For the rest of you, there is an easy way to check if your debt is not healthy and it is called: the debt check.

DEBT CHECK

The debt check gives you 4 warning signs that you are heading to a troubled path. Awareness of this will come a long way later on. Check if these apply to you:

1. You do not know exactly how much you owe. This shows that you are not in control over your debts.

2. You are usually paying late for bills and sometimes, you go over your credit limit. This could only pile up the debt even more.

Image Credits: pixabay.com (License: CC0 Public Domain)

3. You use your credit card as you would use a debit card just to get by. You can be charged with a higher rate of interest.

4. You are borrowing money to pay your debts. In a sense, you are currently borrowing money to pay the money that you previously borrowed. This vicious cycle is how most people get into trouble.

MAKING YOUR DEBTS HEALTHIER

If all or any of the warning signs apply to you then, you need to take action – now! Take control of your debt and live a happier life by:

1. GATHER DATA

The first step is to gather date of where you are financially. It is important that you are aware of your current debt situation by knowing: how much you owe, to whom you owe these to, how often do you need to repay the amounts, and what interest rates are attached to these.

2. PRIORITIZE DEBTS

The consequences of not paying off some debts are more serious than others so, you must divide your debts into categories. The categories are priority and non-priority debts. Priority debts include mortgage, rent, government tax, loans, utility bills, and child maintenance (if applicable). These are priority debts because you do not want to lose your home, to be bankrupt, to have your electricity cut off, and to be summoned in court. The rest of the debts are non-priority debts.

3. ESTABLISH A BUDGET

Establish a budget to track your spending and savings. Keep track by having an online or physical journal where you log your cash flow every month. By doing so, you will get a fuller picture of where you spend too much and where to cut down costs. You can get out of debt faster if you prioritize paying it.

4. STICK TO YOUR BUDGET

Here are some helpful tips to ensure that you stick to your budget:

Sources: 1 , 2, & 3

Is Your CPF Enough to Retire On?

Many Singaporeans look to their CPF to provide for retirement. As the General Election draws close however, some critics have panned the retirement scheme, saying it no longer suffices. Have a look at some of the realities of the CPF, and decide for yourself:

What is the CPF?

The Central Provident Fund (CPF) is a mandatory savings scheme for Singaporeans. This fund is used to provide for a range of crucial financial needs, such as healthcare, retirement, and home ownership.

Your CPF is automatically deducted from your wages, and your employer is also required to pay a portion into your CPF. Compulsory CPF contributions are as follows:

Age	Your contribution	Your employer’s contribution
Up to 50 years old	20% of monthly income	17% of monthly income
From 51 to 55 years old	19% of monthly income	16% of monthly income
From 56 to 60 years old	13% of monthly income	12% of monthly income
From 61 to 65 years old	7.5% of monthly income	8.5% of monthly income
Above 65	5% of monthly income	7.5% of monthly income

Your CPF is divided into an Ordinary Account (OA), a Special Account (SA), and your Medisave account. The interest rates for these accounts (as of 2015) are:

OA – 3.5% per annum
SA – 5% per annum
Medisave – 5% per annum

You do have the option to invest your CPF money in other schemes, based on an approved list. However, the returns are not guaranteed, and the government will not replace any losses you incur. You can see further details on allowable investments here.

Once you reach the age of 55, you will be able to withdraw all the money except for a required Minimum Sum. The Minimum Sum is placed in a Retirement Account (RA). From the age of 65, savings in your RA are disbursed to you in monthly payouts, which should ideally last till you are 90.

The Minimum Sum (as of 2015) is S$155,000. From the age of 65, this should provide monthly payouts of around S$1,200.

Is the CPF Alone Enough to Retire On?

The answer for most Singaporeans is “yes, but…” Here are some of the factors you need to consider:

Your CPF depletes very quickly when used to pay for your flat
The CPF rate barely keeps pace with inflation
A lot depends on how comfortable you want your retirement to be

1. Your CPF Depletes Very Quickly When Used to Pay for Your Home

Buying a home is one of the ways Singaporeans use their CPF. When you take out a HDB concessionary loan, the entirety of the down payment can come from your CPF*.

(*This does not apply to private bank loans, in which only 15% of the down payment can be made with CPF.)

CPF can also be used to pay for certain fees, such as the legal paperwork for the purchase. Mortgage repayments can be taken from your CPF rather than your bank account.

But this means that, if you use too much of your CPF money purchasing a house, there is a real possibility of it running out.

If you use HDB loans, the interest rate is 0.1% above the prevailing CPF rate (3.6% at present). If you use a private bank loan, the rate fluctuates according to an index, such as SIBOR or SOR. Both options can wipe out your CPF, and leave too little even for the Minimum Sum.

So if you want CPF to provide for your retirement, never overreach and buy a property beyond your means. If you buy the biggest house you can possibly qualify for, be aware that you could be forced to sell it to fund your retirement.

2. The CPF Barely Keeps Pace with Inflation

Singapore’s core inflation hovers at around 3%, which is on par with most developed countries. This means that the general cost of living goes up by 3% with each passing year, and your wealth is being depleted if it can’t grow as fast.

Given the CPF’s return of 3.5% and 5% (for OA and SA respectively), your real returns are only around 0.5% for OA and 2% for SA. This means that relying on CPF alone will provide for a very modest retirement.

Should you have plans after you stop working (e.g. travel the world, look after your grandchildren financially), it may not be a good idea to rely solely on CPF. You should speak to a financial advisor or a wealth manager about different investment products, which can complement your CPF.

3. A Lot Depends on How Comfortable You Want Your Retirement to Be
A pay out of S$1,200 a month is comfortable for some people, but painful for others. We are all used to different standards of living. If you enjoy a high income of S$15,000 a month, for example, switching to S$1,200 a month will be extremely painful.

As such, it is important to work out your desired Income Replacement Rate (IRR). This can be done with holistic financial planning, which also takes into account the amount you will need at retirement, and how long you have to get there (your investment horizon).

Do not believe any arbitrary “rules”, such as sayings that you must have a million dollars to retire in Singapore, or that S$500,000 is enough to quit your job. Such figures are not grounded in your specific needs. Speak to a qualified wealth manager or financial advisor to identify the sum you need.

A Note on Debt
Personal loans range from 6 – 8% per annum, and credit card loans reach around 24%. Your CPF interest rates (or the rates of even the most phenomenal financial products on the market) will never “outgrow” your debt. It is almost impossible.

If you want to retire well, you must pay down your debts early. Be an extreme miser with loans. Make comparisons every time you need money from the bank. You can find the best loans on SingSaver.com.sg.

In Summary:
The CPF is enough to provide the bare basics, when it comes to retirement. However, your retirement will not be lavish if you rely on CPF alone, especially if you are used to a more expensive lifestyle.

(This article is brought to you by SingSaver.com.sg)

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