6 Savvy Financial Tips for Young Adults

Managing finances can be challenging, especially when you are navigating through different conflicts such as budgeting with an entry-level salary or carrying a hefty student loan debt.

Focusing on the fundamental financial strategies will enable you to strengthen your financial position. Work towards achieving your goals and financial success with these savvy tips.

#1: ESTABLISH YOUR EMERGENCY FUND

The importance of building an emergency fund has been the subject of many financial articles. After all, it is one of the most vital financial tasks that you can accomplish as a young adult. An emergency fund is a pool of money that you can earmark for unforeseen expenses.

When unexpected life events occur, the emergency fund acts as a cushion for your finances. For instance, you can use your emergency fund to pay for expenses that come with sudden job loss or appliance breakdown. The amount that you will save depends on the stability of your job, the debts you have, and your income. Experts recommend saving about six months’ worth of living expenses. You can allot at least 2% of every paycheck to accumulate this amount.

#2: GET BASIC HEALTH AND LIFE INSURANCE

Financial literacy involves understanding how to prevent and manage financial issues as they arise. To help you deal with unexpected expenses, you may get yourself insured. Educate yourself about the different insurance products available on the market right now.

Get yourself insured while your premiums are low (i.e., mainly due to your age). If you have dependents, consider getting term insurance to protect them in the event that you become permanently disabled or you pass away.

#3: KNOW WHERE YOUR MONEY GOES

Stay on top of your budget plan by knowing where your money goes. Ensure that your expenses do not exceed your income. As you may be earning with a starting salary, keeping your recurring monthly expenses low can save you significant money over time.

Once you see how the cost of your morning coffee or take-away dinner adds up, you will realize that making small changes to your daily expenses can have a big impact on your financial situation.

#4: PAY OFF THE CREDIT CARD BALANCES

Searching for the lowest interest rates when comparing loan terms can help you save a substantial amount of money over time. You can pay off your credit card balances each month, so you do not get trapped by the interest charges. You can look for a credible expert such as a credit counselor if necessary.

#5: MAKE INFORMED FINANCIAL DECISIONS

Examine your personal needs and goals. Make informed financial decisions by studying the potential outcomes of your options. There are trade-offs between your short-term and long-term goals. For instance, purchasing a car can impact your savings for retirement.

Therefore, you must invest in items that will improve your earning abilities. You can invest in a good suit, an educational advancement, and a set of electronic devices to help you in your job hunting.

#6: LEARN SELF-CONTROL

As a young adult, learning the art of delayed gratification is easier said than done. However, personal finances are easier to manage when you have self-control.

Effortlessly purchasing an item on credit is possible, but the best step is to wait until you have saved up enough money for your purchase. Do you really want to pay interest on a pair of designer shoes?

Image Credits: unsplash.com

Please do not carry more cards than you can keep track of. This savvy tip is crucial for creating a healthy credit history.

Sources: 1 & 2

Read More...

Have You Heard About the Debt Snowball Strategy?

WHAT IS THE DEBT SNOWBALL STRATEGY?

Popularized by personal finance author Dave Ramsey, Debt Snowball is a strategy used for paying down debts. It focuses on paying off your smallest balance first before moving to the larger ones. The person lists down all his or her debts and categorizes these debts from smallest to largest. Money will then be allocated to pay off the smallest debt first, while making only minimum monthly payments on the other debts.

This strategy would not save you as much interest as the Debt Avalanche, but it can help you stay on track in your debt repayment journey.

HOW CAN YOU GET STARTED?

List down all your debts to get started. Then, gain momentum as you knock out each remaining balance. When the smallest debt is paid in full, you will move your efforts toward the next smallest debt on the list. To illustrate, here are the steps:

Step 1: Write down all your debts from smallest to largest, regardless of its interest rate

Step 2: Make minimum payments on all your debts except for the smallest debt on your list.

Step 3: Pay as much money as you can on your smallest debt. This is going to be your priority.

Step 4: Repeat the process until each debt is paid in full.

HOW CAN I APPLY THIS STRATEGY?

Let us imagine that you can afford to put aside S$1,000 every month to pay off your three sources of debt: S$30,000 worth of student loan debt (minimum monthly payment of S$500), S$5,000 worth of car loan debt (minimum monthly payment of S$100), and S$2,000 worth of credit card debt (minimum monthly payment of S$50).

Using the Debt Snowball strategy, you would spend a total of S$650 to cover each debt’s minimum monthly payment. You would then put the remaining S$350 toward the credit card debt because it is the smallest on your list.

Once the credit card debt has been fully paid, the extra payment will go towards your second-smallest debt. At some point, you will be able to clear up your car loan and focus all your money on eliminating your student loan. Like a snowball, each paid-off debt frees more cash to get rid of the remaining ones.

WHAT ARE ITS ADVANTAGES AND DISADVANTAGES?

Its advantages include increasing your motivation and easing your implementation. Paying off three or more debts can seem more manageable if you break it down into smaller pieces. You see, you can get frustrated with the repayment plan if you focus all your efforts on the largest debts. Furthermore, this strategy is easy to implement. You do not need to compare the annual percentage rates (APRs) for all your debts or to tackle deeper into the terms and conditions. You simply need to know the balance owed and its minimum monthly payment to categorize each debt.

On the other hand, its disadvantages include issues in time and interest. Since this strategy focuses on repaying debts according to the balance, it may take you longer to pay off your debts. Interest can be another factor because you are prioritizing balances over APRs. Remember, you could end up paying more money in interest over time.

WHAT ARE THE KEY TAKEAWAYS?

The Debt Snowball Strategy helps you pay off debts by focusing on your smallest balance before moving on to the remaining ones. You will always pay the minimum on each of your debts, except on your smallest debt. This strategy cannot save you as much interest as the Debt Avalanche, but it can help you stay motivated.

Prudent use of personal loans can save you more in the long run, especially if you’re currently saddled with severe credit card debt or are facing a financial emergency that could wipe out your savings. Ultimately, the only way to prevent bad debt from snowballing is to have the discipline to control your spending until your loan is repaid. If you find yourself in any of the above situations and are looking for a personal loan to help relieve some of your financial burden, be one of the first 2 applicants daily to have your 1st year’s interest (up to S$550) covered by SingSaver. Click here to learn more. Offer until 21st Mar 2022. T&Cs apply.

Image Credits: ramseysolutions.com

If you need professional help when it comes to managing your debt, you can seek assistance from a credit card counselling organization such as the non-profit organization called Credit Counselling Singapore (CCS).

Sources: 1, 2, & 3

Read More...

Travel Insurance vs International Health Insurance with selected Covid-19 Coverage

Are you unsure about the difference between travel insurance with selected Covid-19 cover and international health insurance? Here we look at the key differences between the two types of cover.

In short, travel insurance with Covid-19 cover is designed for holidaymakers and those on short business trips to cover things like emergency medical treatment (including covered events related to Covid-19), cancellations and personal belongings. International health insurance provides multi-country cover and is designed for those living and working overseas who need cover for in-patient medical check-ups, medical emergencies and ongoing treatment of chronic conditions.

Below is a general comparison of travel Insurance with selected Covid-19 cover and international health insurance. Exact coverage will depend on the chosen policy.

What about lockdowns and other kinds of general travel disruption?

It’s important to remember that travel insurance doesn’t cover you for everything*. For instance, it does not generally cover against lockdowns, border closures and other kinds of general travel disruption.

*It’s important to remember that travel insurance doesn’t cover everything. Your policy will be subject to the terms, conditions, exclusions, and benefits limits of the policy wording

Travel insurance (with selected Covid-19 cover*) – in more detail

Travel insurance with selected Covid-19 cover is travel insurance that covers you for things like trip cancellations / trip interruptions / trip delay , loss/theft of personal belongings and emergency medical treatment, and includes selected coverage for Covid-19, pandemics and epidemics before or during your trip (in line with the Policy Wording of your chosen policy).

For example:

  • If you or a travelling companion/family member are diagnosed with Covid-19 before your trip and need to cancel, you can make a claim for things like travel and accommodation costs.
  • If you or a travelling companion/family member are diagnosed with Covid-19 during your trip, you can make a claim for things like medical care and quarantine costs.

In terms of medical coverage, travel insurance is intended to provide short-term emergency medical treatment within your specified area or period of cover. The aim of this is to get you well enough to return home. Travel insurance rarely covers long term medical treatment.

Selected Covid-19 coverage* with Allianz Travel

Travel insurance from Allianz Travel Singapore includes selected Covid-19 coverage*, plus cover for epidemics and pandemics in general (when diagnosed with a disease). The Medical and Dental cover limit is S$1,000,000 (Comprehensive Bronze and Silver) and unlimited for Comprehensive Platinum.

Travel insurance in general is designed to cover you for trips of limited duration. It is intended for holidaymakers and short term trips abroad, and also offers protection against other travel related issues.

For example, Allianz Travel insurance benefits include:

  • Selected Covid-19, pandemic and epidemic cover*
  • Medical/dental cover of up to $1,000,000
  • 24/7 Medical Assistance
  • Cancellation, Delay, Curtailment
  • Loss/theft/damage of valuables
  • Rental Excess cover (Silver & Platinum Plans only)

If further treatment is required, you will be expected to return to your home country. Cover ceases once you are back in your country of residence.

*It’s important to remember that travel insurance doesn’t cover everything. Your policy will be subject to the terms, conditions, exclusions, and benefits limits of the policy wording. For more information please click on the Allianz Travel Policy Wording

Buy Travel Insurance Now

Get exclusive 40% off for MoneyDigest readers.
Use promo code: moneydigest40 until 28 March 2022

International health insurance – in more detail

International health insurance is designed for individuals and families living and working overseas for prolonged periods. It is designed to cover things like in-patient care, out-patient GP visits, emergency treatment, specialist consultations, maternity and dental. International health insurance is multi-country and provides members with flexibility in terms of choice of doctor and treatment facility, and with the ability to receive treatment anywhere within their region of cover.

For individuals or families who are unfamiliar with a country’s health system and/or language, international health insurance can make it easier and simpler to obtain medical care. Depending on which country you are moving to, it may also save you significant sums of money compared to ad hoc care if you are not entitled to local free or subsidised medical care.

International health insurance plans vary, but often include:

  • Hospital stay
  • Routine check-ups
  • Cover for pre-existing conditions
  • Cover for chronic conditions
  • Choice of medical providers

Some international health insurers make it possible to build a plan that suits specific needs. For example, Allianz offers a standard Core plan to which modules can be added, including:

  • Out-patient treatment
  • Maternity care
  • Dental care
  • Repatriation

If you choose international health insurance from Allianz, benefits include:

  • A range of treatments, inclusive of specialist fees and diagnostic tests, plus generous cover for alternative treatments and physiotherapy
  • Health and wellbeing benefits, including digital health apps
  • Cover for emergency treatment overseas, medical evacuation and nursing-at-home
  • Choice of supplemental cover including Maternity, Dental and Repatriation Plans
  • A growing network of over 900,000 quality medical providers
  • Cover for Covid-19, pandemics and epidemics

Get 10% off until 28 February 2022

Discover More

Read More...

6 Money Lessons To Avoid Being Broke

Nobody ever wakes up one morning and thinks, “I want to be broke.” A hefty loan here, a bad investment there, and a long credit card statement later – you have no idea how you landed in this state. You are living paycheck to paycheck without savings intact.

What can you do to turn the tide? Start by reading this article and applying these lessons into your life.

#1: THE POWER OF SETTING CLEAR FINANCIAL GOALS

Goals mark your direction in life. If you do not have a clear destination to work towards, it can be difficult to find the passion or motivation to save. Whether you are eyeing on purchasing a flat or figuring out how to pay off your debts, crafting a plan can get you there.

As you set your financial goals, consider making them SMART. Financial goals need to be specific, measurable, attainable, realistic, and time bound. Creating goals using the SMART method can help you ensure that you are working on an achievable goal within the timeline that you set. Stay on course!

#2: DON’T BUY WHAT YOU CAN’T AFFORD

Spending less than you make and buying what you can afford seem like simple personal finance rules. However, these are easier said than done. You can get distracted with the consumer-driven society that tempts you to live beyond your means. When this happens, a good rule of thumb is to save at least 15% of your income.

If you find it hard to save money, try paying for groceries and clothes with cash instead of a credit card. Take it one step further by using a budget per month. Withdrawing a fixed amount every month can help you to become more aware of your spending choices.

#3: EMBRACE THE FINANCIAL WORLD

The majority of personal finance lessons do not center around financial education, but on financial behavior. If you can modify your behavior with money, you can alter your financial future. Remember that you do not need to be a financial expert to prepare an emergency fund or to save for retirement. Start by building a solid financial plan and committing to it.

#4: THE IMPORTANCE OF INCREASING YOUR INCOME

Search for part-time jobs such as freelancing or dog walking to grow your income. You can take on other positions in the same company too. If you feel like you have reached the glass ceiling in your field, consider looking for new career paths to generate more income. Increasing your income can help your financial future.

#5: INVEST SMARTLY, AND NOT IMPULSIVELY

Investing is a good way to protect and grow your assets. However, the talent of wise investing does not come to us all. You may be succumbing to emotions and invest impulsively, hence you win big or lose big.

As a precaution, have an advisor who is trustworthy and credible. Research on your part is vital as well. It will give you the knowledge and confidence you need to make smart investments.

#6: BUDGET YOUR MONEY

It is understood that budgeting plays an essential role in controlling your spending, paying off debts, and staying on track with your financial goals. Creating a budget starts with adding up all your expenses for the month and subtracting that amount from your total income.

Image Credits: unsplash.com

Set monthly and daily spending limits to adjust and make up for any oversights. You can create a budget using a notebook, a spreadsheet, or a budgeting app. Use a tool with which you are most comfortable.

Sources: 1 & 2

Read More...

7 Financial Resolutions That You Can Fulfill This 2022

For the lack of a better term, the period between 2020 to 2021 was “rubbish”. People all over the world had to deal with the adverse effects of the pandemic. Unexpected economic and social shifts occurred. Nonetheless, most of us are ready to bid farewell to the yesteryears.

While many Singaporeans are committing to eat healthy and to exercise more, here are seven financial resolutions that you can consider for a more prosperous year.

1. BROADEN YOUR FINANCIAL KNOWLEDGE

Books and audiobooks provide opportunities to broaden one’s financial knowledge. You can enter the inner workings of great entrepreneurs and investors by reading though the pages of books such as “The Intelligent Investor” by Benjamin Graham, “The Psychology of Money” by Morgan Housel, “Rich Dad Poor Dad” by Robert Kiyosaki, “Think and Grow Rich” by Napoleon Hill, “Raising Financially Fit Kids” by Joline Godfrey, and “The Richest Man in Babylon” by George S. Clason.

Create an achievable list of all the financial books that you want to finish within the year. Set a realistic goal for the number of pages that you can accomplish each week. Start now!

2. CUT DOWN YOUR WATER CONSUMPTION

Singaporeans do not typically worry about clean and fresh water. However, the global supply of consumable water is getting scarce with each passing year.

Consider reducing your water consumption by turning off the tap while brushing your teeth, using less water while gardening, installing a water-saving shower head, and only washing your clothes when necessary. Minimize your expenses and help save the Earth.

3. COOK MORE MEALS AT HOME

Increase your savings by cooking from scratch. Find recipes online or ask your loved ones for their specialties. Cooking more meals at home can reduce your restaurant or take-out expenses.

Calculate your food savings and consider putting the extra cash to your emergency fund or to pay off your debts.

4. BE PROMPT AT ALL TIMES

Time is a valuable resource. There is a reason why it goes hand in hand with money. As the job market becomes increasingly competitive, most companies have minimum tolerance for employee tardiness. Keep your source of livelihood by always being on time.

You do not need to exhaust your resources or skills to remain prompt. Simply set an appropriate alarm and adhere to your organization’s schedule.

5. UPDATE YOUR BENEFICIARIES

With the uncertainties of the modern world, it is important to revisit your beneficiary designations. Adding a beneficiary to your accounts and policies can help ensure that your assets will go to your desired people. Align your will (i.e., last will and testament) to your accounts and insurance policies.

6. SEARCH YOUR HOME FIRST

Search the contents of your home, before committing to a major purchase. There are many ways to use your resources. You just need to be creative and hands-on!

For instance, you may use your old drawer as your baby’s diaper changing table. You can also spruce up your walls by purchasing Very Peri wallpaper online.

Related Post: 2022’s Pantone Color of the Year is Here — Decorate Your Home with Very Peri

7. MAKE THINGS SIMPLER

All of us are drained because of the massive chaos that recent years have brought. Reduce your worries by cancelling or closing the accounts or cards that you no longer use. Then, set up automatic transfers.

Image Credits: pixabay.com

Some financial institutions allow the employer to automate your salary in your bank account. Patronizing this method will lessen the temptation of immediate spending.

 

Read More...