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Four Financial Strategies To Usher The New Year

STRATEGY #1: REVISE YOUR HOUSEHOLD BUDGET

Overspending during the festive season happens to most of us. I cannot blame you! The competitive prices of the shops as well as the constant sales are undeniably tempting. This is why the New Year is a good time to revisit your previous household budget. Understand what went wrong in your current budget to help you succeed in 2017.

Start by making a detailed list of your total income. Then, collate all your annual expenses including debts. Build a robust budget plan out of these information. Do not forget to pay off all of the extra debts that were incurred during the season. Be realistic when it comes to how much you can pay at a given point in time.

STRATEGY #2: BEGIN ON A HUMBLE NOTE

Have you ever noticed that the individuals who partake in those “crash diets” (i.e., defined as a method of losing body weight quickly by eating very little) eventually bounce back to their previous figures? The significant relapse can be due to the dramatic and sudden changes in actions. It is unlikely that change will occur if you speed up the process. The same idea applies to your finances.

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Beginning with a humble note entails welcoming the new year with small and simple financial goals. This strategy is smart as it helps you to build confidence and momentum to achieve more complex and longer objectives. Learn how to adjust your behavior by reading the book entitled, “Investor Behavior: The Psychology of Financial Planning and Investing“.

STRATEGY #3: SET REGULAR REMINDERS

Say that you are done planning out your short-term and long-term goals for 2017. Put your creative juices to test by devising ways to remember those objectives. Personally, I use technology to create visual lists that I can view in my laptop and in my mobile phone. It helps me to monitor my financial progress.

If staying prompt is a part of your New Year’s resolutions then, you may consider setting up payment reminders. Do not tolerate late fees and payments by placing a notification on your eletronic calendar.

STRATEGY #4: PAY YOURSELF FIRST

Conquer a certain goal or eliminate a certain debt throughout the year by using one of the most potent strategies – to “Pay Yourself First”. This works well if your resolution focuses on saving money. Set aside a portion of your income as soon as you receive your paycheck. Allocate this portion to your CPF, retirement, or savings account.

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This means that the first bill that you shall fulfill is your own’s.

Sources: 1, 2, & 3

Surefire Ways To Save Money On Your Next Income Tax

Anyone who takes part in trade and business is chargeable with tax. It is known that tax rates in Singapore are relatively lower compared to other countries in the world, making it more attractive for individuals and corporations to participate in some form of exchange in business.

Despite the relatively lower tax rates, no one entirely enjoys the act of filing for taxes! This is why you must employ creative ways to save on your next income tax. Consider these suggestions:

1. TAKE PART IN SUPPLEMENTARY RETIREMENT SCHEME

The Supplementary Retirement Scheme (SRS) is part of the government’s financial strategy to help Singaporeans increase their saving as they age. It is a type of retirement savings scheme that is voluntary, where anyone who has an SRS account may contribute any amount they want, which is still subject to a cap. The maximum contribution is capped at S$15,300 in 2016, a slight increase of S$2,550 from last year’s cap.

The more you save for your retirement using the SRS, the less you pay for your income tax. That being said, two apparent benefits are seen when contributing to SRS. The first being, for every dollar contributed to your account, taxable income will be reduced by a dollar. The second being, 50% of your SRS savings will not be taxed. Additionally, you are eligible to spread your withdrawals over a 10-year period.

2. HIT TWO BIRDS WITH ONE STONE

Fulfill your duty as a steward of goodwill and your duty as a responsible citizen by donating in accredited institutions. Several forms of donation are claimable. The following types of donations will qualify you for a double tax deduction (twice the amount of the donation):

a. Cash Donations
b. Shares Donations
c. Computer Donations
d. Artefact Donations
e. Public Art Tax Incentive Scheme
f. Land and Building Donations

For instance, a donation to the Singapore museums that have obtained the Approved Museum Status with the National Heritage Board is tax deductible.

Related Article: Basic Guide To Taxation In Singapore

3. REAP THE BENEFITS OF CPF CASH TOP-UP RELIEF

If you are interested in increasing not only your retirement savings but also the retirement savings of your loved ones, you might want to consider the CPF Retirement Sum Topping-Up Scheme.

You will be entitled to a dollar-for-dollar tax relief at a maximum of S$14,000 per annum. This entails a cap of S$7,000 for the individual and another S$7,000 for the family members (T&Cs apply).

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Paying income tax can be painful to your wallet. This is why you must take advantage of the many ways to claim tax relief or rebates.

Sources: 1, 2, & 3

Newbie’s Guide To Singapore’s Credit Bureau

The Credit Bureau (Singapore) is a principal credit consumer agency, which has the most comprehensive industry uploads originating from all the major financial institutions and retail banks. Credit Bureau (CB) is a joint venture between the “Infocredit Holdings Pte Ltd.” and “The Association of Banks in Singapore”.

The Monetary Authority of Singapore’s (MAS) vision to improve the public’s risk management capabilities is in lined with the holistic embodiment of CB. How is this so?

The Banking Act allowed the members of CB (e.g., credit card companies) to reveal credit-related data for the strong purpose of analyzing the creditworthiness of existing and potential customers. Simply, CB presents a “complete risk profile” of a particular customer to a particular credit card provider.

This complete risk profile includes a tangible number called the Credit Score. The Credit Score is an independent assessment of an applicant, which guides the decisions of the lenders. It is gauges the likelihood of repayment as well as the probability of going into default. You must pay close attention to your Credit Score if you are planning to apply for any forms of loans or credit. For instance, you and your spouse need good Credit Score to successfully take up an educational loan for your children.

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Say your Credit Score has been in its low point for the past 2 months. Wary not, my friend. You may still rejuvenate your credit history as the reports from the CB manifest your record on promptness over a 12-month period. You read that right! You have the ability to technically “undo” a poor credit history due to late payments and unmet minimum repayment sums. However, paying your monthly credit card bills and loan installments on time must be your top priority for the next 12 months. Doing so will only clean up a section of your credit report known as the “Account Status History”.

Hope fades when your problems go deeper than late repayments. Serious financial situations such as bankruptcy proceedings and debt management programs will remain reflective on your credit report. You have to be careful to secure a pleasant future!

Sources: 1, 2, & 3

Are You Cut Out To Be A Landlord In Singapore?

While looking out for a flat seems like an easy task, hard work needs to be poured behind the scenes. Ensure that you are prepared to be a landlord by analyzing some of the initial factors:

Are you familiar with the legal regulations?

Much like the systems imposed in many institutions in Singapore, rental property owners need to follow a set of regulations as mandated by the Law. Facets include leases, licenses, security deposits, maximum number of tenants, and eviction matters. These facets are examined by attorneys and other authorities in order to protect the interest of the landlords and the tenants.

It is important to be specific when it comes to written documents in order to have a strong support to your case, shall a dispute arise. Acknowledge the landlord-tenant rights as well as the eligibility standards for renting out a flat in Singapore. For starters, you have to be a Singaporean Citizen who has met the Minimum Occupation Period (MOP) to rent out an HDB flat.

Can you afford to become a landlord in Singapore?

Since your first property is the flat that you are occupying at the present, your investment will be considered as a “second property”. Just because you have a sufficient amount of money saved up for down-payment does not necessarily entail that you can afford to purchase a second property! Remember that you are living in Singapore – one of the most expensive cities in the world.

It will become your responsible to keep up with the ownership fees, maintenance costs, and mortgage. Familiarize yourself with these expenses before taking the significant plunge.

Do you consider yourself as a “people person”?

The media has portrayed landlords as people who exude unpleasant characteristics such as being slow in tenant assistance. If you really want to break this stereotype, you must determine if you are a genuine people person.

A “people person” finds delight when interacting with other people. Some landlords are naturally born with this trait. However, others have to bring extra effort when socializing. Ask yourself these questions:

a. Do you have the capacity to understand the tenants’ needs?
b. Are you willing to actively listen to your tenants’ concerns?
c. Will you tend to the property matters immediately?
d. Are you willing to make upgrades on your property regularly?

Answering these questions will help you determine if becoming a landlord is right for you. I cannot deny the fact that having good communication and interaction skills can help you to attract more tenants!

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Rental property ownership is one of the most profitable investments for your retirement portfolio. It is also an excellent source of passive income. To know whether you are cut out for the job or not, you must initially analyze the factors above.

Sources: 1 & 2

How To Bounce Back From The Holiday Splurges

The Yuletide season is upon us! Today is special as we celebrate the joyous occasion of Christ’s birth. While some people may not celebrate Christmas, December 25 (Sunday) is considered as a public holiday that will be observed on December 26 (Monday). Many Singaporeans take this long weekend as an opportunity to be with their families or to travel overseas.

If you went a little over your budget these season, January may welcome you with large debts and bank statements. Do not panic just yet. Take a deep breath! Consider these steps to bounce bank from your holiday splurges:

STEP 1: KNOW WHERE YOU STAND

You must initially assess your overall monetary situation. It does not take a financial whiz to decode what the first step entails! Simply include your budget and spending patterns from the past two months as well as your financial goals (i.e., both long-term and short-term).

Make a detailed list of all your debts, bills, due dates, and interest rates. This will help you to create a timeframe that will guide you towards paying down your debts. There is hope!

STEP 2: IDENTIFY WAYS TO CUT BACK

The damage has been done! It is time to take control of the situation by breaking the cycle of frivolous spending. Commit to a debt diet or prevent purchasing non-essential goods.

Avoid unnecessary spending by employing strategies such as reducing your energy consumption, using coupons, planning your weekly meals, or comparing prices online. These may seem miniscule, but these measures can make a huge difference to your wealth!

STEP 3: PLAN FOR THE FUTURE

To secure the future of your finances, you must build a robust budget plan to pay off all of the extra debts that were incurred during the season. Revise your current budget and stick to it! Be realistic when it comes to how much you can pay at a given point in time.

The remaining days of December is a good time to start thinking ahead. Understand what went wrong in your current holiday budget to help you next year. Perhaps you need to purchase your gifts as early as the Great Singapore Sale to save more money. Or, you may lower your entire gifting allowance.

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Whatever your mistakes were, it is important to learn from them.

Sources: 1,2 & 3

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