MoneyDigest - Personal Finance, Lifestyle, Money Saving Tips

5 Steps In Building A Financial Plan

Generally speaking, a financial plan is a comprehensive evaluation of an individual’s current and future financial state. Crafting a financial plan involves using known variables to predict income, asset values, and withdrawal plans. Thus, you have to go through a series of steps to adjust your savings and spending habits.

Here are just some of the steps:

STEP 1: KNOW WHERE YOUR MONEY GOES

Your top priority is to develop a detailed list of where your money is heading to. It does not matter if you are using a legal pad, a smartphone app, or a computer software! The only thing that matters is that you have a working system. An organized system lets you identify the expenses that occur each month (fixed expenses) and those that change (variable expenses).

Do not forget to input seasonal expenses such as the Labor Day staycation or Valentine’s Day present. Calculating your cash flow may seem like a hassle, but it will help you determine the amount of money that you can commit to your goals.

STEP 2: SET YOUR MONTHLY SAVINGS GOALS

Much like a road trip, you must set a route to stay in the course of your financial plan. Select a path which you want to reach in a specific amount of time. For instance, you may want to start saving for retirement as early as aged 25. Set a monthly savings goal upon knowing your time-frame and how much you need to save. Fit your monthly savings goal within your budget.

If you cannot save as much as your goal requires, you can trim down your monthly spending. Alternatively, you may look for ways to increase your income or to extend your completion date.

STEP 3: CELEBRATE THE MILESTONES

Why do you think corporate incentives exist? Well, they are deemed to keep you motivated while in the process of achieving a company or a cooperative goal. The same goes for your finances. The only difference is…you have a personal goal to fill.

Image Credits: pixabay.com

Create milestones after completing your monthly savings goal. Celebrate in a simple and satisfying fashion (e.g., eating your favorite Korean dessert). You do not want to blow up your credit even more!

STEP 4: CONQUER YOUR DEBT

As tough as this may sound, you must attack debt while avoiding further debt. Start by listing down your outstanding debt including two columns for balances and interest rates. There are two main strategies that you can choose from. You can either start with the highest interest rate or employ the “Snowball Strategy”.

The latter refers to eliminating all the smallest items first before working your way to the highest items. Both can be effective as the most important thing is to pay more than the minimum. Seeing your debt diminish one after another can be good for your self-esteem.

STEP 5: STOP PROCRASTINATING AND START SAVING

The perfect time to start saving is at the present. Take a look at your guilty pleasures. Notice where you can make some adjustments, but do not be too harsh on yourself. Aim to control your entertainment expenses and not eliminate them entirely (unless these items are unhealthy)! This will free up some cash to put in your monthly savings goal.

If an emergency comes along and forces you to dip into your savings, do not fret. This is what financial cushioning is for. Just make it a priority to replenish your fund as soon as possible.

Image Credits: pixabay.com

Financial plans aid in creating a strategy for paying off your debt, in determining where your money goes, and in achieving your other savings goals. I wish you all the best when crafting your own plan.

Sources: 1, 2, 3 & 4

Decoding 6 Weird Financial Slang For Your Use

Conversations about finance and business can be painfully dull and complicated at times. I can forgive you if your eyelids feel droopy after an hour-long presentation filled with profit margins, projected income, and other related topics.

This longstanding industry is filled with lively jargon and phrases that are used to describe trends and practices. Here are just some of them:

1. COCKROACH THEORY

Nope! I am not talking about the disgusting pest that my sister hates. The Cockroach Theory occurs when a company reports ill news to the public and covers up more behind the scenes.

2. PUKE POINT

The “Puke Point” refers to a time when an investor can no longer tolerate his or her losses and decides to sell the asset instead. The investor does so regardless of the asset’s steeply falling price.

Image Credits: pixabay.com

3. BIG UGLIES

Companies in the industrial sector like mining or steel are informally termed as “Big Uglies”. Although investing in these companies can bring one steady returns, some investors ignore them in favor for trendier stocks.

4. FREAKY FRIDAY

Freaky Friday occurs on the third Friday of December, March, June, and September. This phenomenon is also called Triple Witching. At this time, the stock market index options and futures expire in one day. This leads to great volumes of trading as investors try to offset their options and futures before the time is up.

5. WOODY

The Woody may sound like a friendly cartoon character, but it is not one. It is a slang that describes the market’s fast and strong upward movement. Have you seen this happen lately?

6. RAZOR-BLADE MODEL

When businesses sell two goods that depend on each other for different prices, they employ the Razor-blade Model. One part is sold cheaply and the other is sold for a higher price.

Image Credits: pixabay.com

Apple’s iPhone immediately came into my mind when I heard about this model. iPhone’s accessories are sold separately. Furthermore, its charger is not the most durable in the market. People are urged to buy a new hefty charger once their old ones have broken down. The cost adds up.

Sources: 1 & 2

You Must Put These Items In Your Financial Bucket List

Tandem skydiving in Miami…check! Owning a car…check! Climbing Mount Kinabalu…check! Scuba diving the Great Barrier Reef…check!

These statements are just some of the items that you can put in your bucket list. Most of these do not come cheap! Hence, you must ignite your passion for getting your finances in order. Add items that will relate to achieving the bigger financial picture. Here are just some that I can suggest:

1. DIMINISH YOUR CREDIT CARD DEBT

Instead of wishing for a million dollars in your savings, it will be easier to pay off your credit card debt. Numerous personal finance experts advocate making a “list of debt” and starting with the highest interest rate. Afterwards, the person shall focus on the rest. This can be effective in the long run.

Image Credits: pixabay.com

However, using the “snowball strategy” can be effective too. This involves eliminating all the smallest items first before working your way to the highest items. After all, the most important thing is to pay more than the minimum.

2. HAVE A SUFFICIENT EMERGENCY FUND

How many times have you read an article that discusses about the mere purpose of having an emergency fund? Too many to mention, right? For individuals who are trying to turn their finances around, saving up a sufficient emergency fund is a milestone that is worthy of celebration.

Re-frame your thoughts and peek into the future! If you have plenty of wealth to tap, you can finance a trip to Australia or other items in your bucket list.

3. SAVE FOR A 7-DAY VACATION

Requesting for a significant time away from work can be difficult to sell to your employer. But, you can argue that taking a week-long vacation can rejuvenate your mind and body. Taking care of your wellbeing will make you more productive at work.

Image Credits: pixabay.com

Remember that you will likely need to achieve many other goals on your financial bucket list before taking a sabbatical. These other goals include paying off debt and setting an emergency fund.

Sources: 1, 2, & 3

Exploring Other Lifestyles That A Singaporean Can Have

Bidding farewell to the mainstream lifestyle and jumping into the wagon of alternatives can be a little scary. For starters, it mixes various subcultures and applies different financial approaches. Are you ready to glance through some of your potential options?

Well, let me start with an option that is relatively expensive to maintain. I shall dub this lifestyle as the “YOGAHOLIC“. Having a Yogaholic lifestyle consists of a balance between work and leisure.

Several years ago, I worked at a fitness studio. This allowed me to cultivate lasting friendships with a few of the Yoga teachers. Many of them led a Yogaholic lifestyle. They frequently go to wellness retreats to rejuvenate their bodies and mold their skills. You do not need to be an expert at Yoga to reap the benefits of a wellness retreat! Two retreat centers came into my mind as they are near Singapore. Enjoy a serene getaway at the luxurious center called The Farm. Located at Batangas (Philippines), The Farm creates a well-rounded program to aid you in restoring your balance. Try their signature spa treatments while you are in there.

The other famous spot nestles in the heart of Ubud (Bali). The Yoga Barn offers daily yoga classes and workshops to establish holistic healing. Embodying the Yogaholic lifestyle allows you to deepen your practice and to adapt healthy eating habits.

Now, let us drastically tip the pointer on the cheaper scale. Let us inspect a way of life that limits one’s spending – the “MINIMALIST” lifestyle. A genuine minimalist does not step out with a pair of brown sack-cloths with hoods or step out of a Muji catalog. Instead, a minimalist tries to purchase as little as possible. This idea contradicts with the materialistic culture that Singaporeans had build. Just notice how many times an average citizen changes his or her smartphone!

Start leading a minimalist lifestyle by keeping your wardrobe simple. You do not have to wear the same shirt or same outfit everyday. Instead, you must avoid hefty designer clothing by purchasing clothes from thrift shops or clearance sales. Do not be afraid to repeat an outfit for a different occasion. Take a hint from the Duchess of Cambridge herself.

Image Credits: pixabay.com

The last lifestyle marries the aforementioned ones together. It prefer to label it as the “ECO-CONSCIOUS” way. Going eco-conscious creates a balance between Mother Earth and its inhabitants. Furthermore, it uses controlled consumption and later saves you money. The conscious effort to create less waste and choose fresh produce will help build a sustainable country that new generations can indulge on.

You may not be ready to join the divergent train, but some of these alternative lifestyles are actually good for your finances. Would you at least consider one option?

Sources:1 & 2

What Not To Do When Requesting For A Raise

Your heart is racing fast and thoughts continue to run into your head. You are about to ask for a pay raise. The best outcome that you can imagine is getting more than what you requested. However, you will be happy to see a small bump up your monthly salary.

Let us face it! When requesting for a raise, there are only a few ways to get it right and many ways to get it wrong. Here are just some scenarios that pertain to the latter:

A STORM OF ULTIMATUMS

Roger came into the room equipped with his egotistical tone. He said: “If I do not get a 20% raise, I am quitting today.” Like Roger, it is natural to crave for fair compensation. Our employers need to see how valuable we are. But, you do not have to waltz in the room with your ultimatums. You may end up quitting abruptly just to save face!

Treat the act of requesting for a raise as a business negotiation. Psychological strategies and conversation tools can sway the opinion of another through a pleasant exchange.

A PERSONAL TURMOIL

Your personal problems including the monetary ones are your problems alone. You took the coveted job and accepted the employer’s offer. I know that emotions can run through the roof when you feel like you are getting duped. However, it is not professional to blame your boss or unload your emotional turmoil onto him or her.

Image Credits: pixabay.com

Calm down and clear your inner conflicts before you discuss about your pay.

A COMPLAIN MENTALITY

In a 2015 interview, local comedian Hossan Leong highlighted that we live in a society driven by the “complain mentality”. He proved this by saying: “One complaint and everyone is up-in-arms. There is a knee-jerk reaction.” Do not let this mentality affect your actions when asking for a raise!

Image Credits: pixabay.com

Your argument should not be based on what your co-workers have that you do not. Instead, it should be based on your accomplishment and performance. Find out the average salary ranges for your position by visiting informative websites such as Payscale.com and by asking credible resources.

Sources: 1 & 2

Search the site