budget Archives | Page 3 of 11

How to Start a Budget from Scratch

Congratulations on starting your financial journey! Creating a budget and sticking to it is no easy feat, but it is the best way to manage your finances and ensure that your money is going toward the expenses that matters most to you and your family.

Start by determining why you want a budget. Deciding on a budget can help you make informed decisions. Budgeters are almost twice as likely to report no financial worries compared to spenders. Moreover, budgeters are less likely to struggle with finances. Common reasons to create a budget include: to save more money, to reduce overspending, to eliminate couple financial disputes, to get out of debt, to break the paycheck-to-paycheck cycle, and to achieve goals.

After determining the reasons why, you want to create a budget, you must go deeper into your current spending habits. What are your spending habits as an individual and as a family? If your budget is not realistic, it is useless. Most experts recommend tracking your spending for about a month to get a clear picture of your spending habits.

The next step is to identify your financial goals. A great framework to use is the SMART method. It stands for Specific, Measurable, Achievable, Relevant, and Timebound. For instance, you want to save S$3,000 for home renovation within six months. You will need to save about S$500 per month. Thanks to your budget, you already know that you will have an excess of S$750 per month. This will help you with your goal!

Once you have your financial goals down, decide how much you need to save (per month or per year) for each goal. Bigger expenses such as home renovation and debt repayment can take a longer time to build. You can also incorporate building an emergency fund into your budget.

The basic phases are done, and it is time to make a budget. There are many types of budgets, so you will have to choose the one that suits you best. Options include zero-based budget and 50-30-20 budget.

A zero-based budget is an approach popularized by Dave Ramsey. It involves making income minus outflow equate to S$0. With a zero-sum budget, every dollar you have is assigned a task, with some of those going into savings or other spending categories. This type of budget can be restrictive, which is not ideal for everyone.

Image Credits: pixabay.com

The 50-30-20, on the other hand, divides your budget into different percentages. 50% of income is allocated toward needs, 30% to your wants, and 20% to your savings. Do your research to help you decide which budget method will make sense for you.

Sources: 1 & 2

Surefire Ways to Make Your Money Work for You

Money is a strong tool that can help you achieve your goals. It can provide stability for your family and allow you to save towards important milestones. To achieve these things, you must know how to make your money work for you.

Making money work for you pertains to using money to make more of it. Your financial decisions can guide you through this. Start by learning how to budget!

#1: LEARN TO BUDGET

Change the way you handle money by budgeting. When you are budgeting, you become more purposeful about where you spend your money on. You are making money do what you desire, rather than spending it without a plan.

Budgeting includes prioritizing your spending, avoiding new debt, paying off debt, identifying harmful financial habits, reducing your spending, and saving for the future. You may need to adjust your budget from time to time.

#2: ELIMINATE DEBT

Debt means your money is not working for you. Your money is going towards paying the interest. Debt creates limitations and financial burdens.

Paying off debt allows you to redirect your funds towards things that are important to you. For instance, you can save up for graduate studies or create your retirement fund. You can begin investing money and allow your wealth to grow.

#3: SAVE AND INVEST

Once you have freed yourself from debt and have extra cash, you can put your money to work by saving and investing. The amount that you will save will depend on your lifestyle, age, and goals.

In addition to having an emergency fund, you will also need to have a retirement fund. You should also consider having the following:

a. education savings
b. travel fund
c. down payment for a house
d. business capital
e. car fund
f. long-term savings for you and your dependents

Image Credits: unsplash.com

Lastly, investing in yourself is one of the best investments you can make. While you might not be able to pinpoint an actualized return on investment, you will eventually see the results in time.

Source: 1

7 Questions to Ask when Reviewing the Annual Budget

By definition, the annual budget outlines a company’s projected income and expenses for a twelve-month period. The process of making an annual budget involves balancing the company’s sources of income against its expenses.

Preparing a robust annual budget is the first step. Having the Board or other key people review it is important to your progression. You see, your annual budget will help you adjust to unexpected transitions and to determine how your company has performed.

On that note, here are seven questions to consider when reviewing the annual budget.

#1: DOES THE BUDGET REFLECT THE COMPANY’S MISSION ACCURATELY?

Assess the budget with the company’s mission in mind. Determine if the annual budget sends a signal that reflects the company’s overall intention and purpose.

#2: DOES THE SPENDING ALIGN WITH YOUR OPERATIONAL PRIORITIES?

Is your company investing in the right things or are you wasting hard-earned money? Know the returns based on your expenditures. Your annual budget must match your strategic plan.

#3: WHAT EXPENSES AND POTENTIAL INCOME ARE INVOLVED WITH UNEXPECTED EVENTS?

Unforeseen events such as the COVID-19 pandemic posed an economic toll to many businesses all over the world. If there are other unexpected events that may occur in your industry, what expenses and potential income are involved? Analyze the possibility of travel costs, advertisement fees, or medical bills.

#4: WHERE ARE THE REVENUES PROJECTED TO COME FROM?

The reliability and competitiveness of your revenue streams dictate the degree of diversification that your company needs. A diversified base for creating income allows a company to stay stable, flexible, and more protected from economic and environmental fluctuations.

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#5: DOES SPENDING ON SALARIES AND COMPENSATION ACHIEVE YOUR STAFFING OBJECTIVES?

Does your compensation strategy match well with your company’s values? Identify whether the hiring manager or the Human Resources department is doing its best to keep and attract the most talented employees. Moreover, you must determine if you can afford to replace the employees who left.

#6: DOES THE BOARD REGULARLY RECEIVE FINANCIAL STATEMENTS THAT CONTAIN BUDGET INFORMATION?

Help the board members arrive at a robust annual budget by sending out financial statements regularly. These statements should be reviewed during board meetings to ensure that all the board members are aware of the profit-and-loss performance.

#7: WHICH POLICIES APPLY TO THE BUDGET REVISIONS?

Mid-course adjustments are common in many companies. Is your senior management allowed to make and approve these adjustments or do significant revisions require board approval? How flexible are the company’s policies on budget revisions? Perhaps, requiring board approval on significant revisions can be efficient to the internal control.

Sources: 1, 2, & 3

S’Pore Yuletide Shopping Do’s & Don’ts

It’s the most wonderful time of the year! Whether you are figuring out how to dodge awkward questions from your relatives or are planning your gift list, this article can help you navigate through the maze of holiday campaigns and attractive sales. Remember, the Yuletide shopping season will be even more cutthroat than the last. You best come prepared!

#1: SHOP SAFELY

Are you excited drop by the Orchard Road? When shopping at the mall, look for stores or businesses that offer safety precautions for its customers and staff. These precautions include enforcing face mask policy, offering hand sanitizers at the entrance, encouraging social distancing, and providing contact-free payment options. Do you part in keeping the community safe by staying at home or by refraining from shopping if you feel unwell.

#2: SHOP AHEAD OF TIME

The massive growth of online shopping and deliveries will likely put an additional strain on the logistics that are already reeling from the COVID-19 pandemic. Many customers have come to expect shipping delays over the past months, but these delays could become worse during the last few months of the year. Not to mention, the effect of the Yuletide season.

Thus, it is best to shop ahead of time. Plan your gift giving list and complete your Yuletide shopping. You can also opt for the store pick-up option. Some retailers such as Samsung and Uniqlo Singapore help alleviate shipping delays by offering the store pick-up option. Customers may purchase the goods online and pick them up in the store to avoid waiting for deliveries.

#3: DO NOT FORGET TO CHECK THE PRICES

Despite your best intentions, the perfect gift may come with a hefty price tag. If you find that a gift can blow your budget, you may use your smartphone to check whether there are better deals elsewhere. Look into websites that post deals such as Money Digest or go to price comparison websites like iPrice.

#4: CREATE A GAME PLAN

Avoid biting into the holiday temptations by creating a game plan before you complete your Christmas or New Year shopping. Make a list of the gifts that you need to buy for the people whom you love the most. Weigh whether you can purchase these gifts online or in-store.

By equipping yourself with a list, you will be able to navigate through the busy malls. If you still have trouble resisting items that are not on your list, consider leaving your credit cards at home. Bring enough cash for your purchases.

#5: DO NOT MAX OUT YOUR CARDS

Your credit card utilization rate is a vital part of your credit score. It refers to how much you currently owe divided by your credit limit. Thus, you must use your credit card wisely to prevent damage to your credit score. Do not get us wrong! It is understandable to have a higher balance over the holidays. However, please try to keep your utilization rate as low as possible. You can either spend less money, use cash for small purchases, or make multiple credit cards payments in a month.

#6: ENSURE ONLINE SECURITY

It is important to educate yourself about shopping securely, given that many people have experienced data breaches over the past years. Monitor your credit and financial accounts regularly and exercise caution when submitting your personal information. Is it secure to provide your credit cards details over the phone? Can you click a random link sent through your spam folder? Be careful!

By proactively guarding your identity and sensitive information, you may be able to prevent fraud from ruining your holidays.

#7: DO NOT SPEND MORE THAN WHAT YOU HAVE

Do not let the flashy advertisements and the pressures of the season to tempt you to go into debt. The holidays can still be a joyous season even if you do not have gifts for everyone. If you do not have enough money for gifts, there is no shame in giving homemade gifts or being present in the celebration. Sometimes, the best gift is spending quality time with the ones you love.

Image Credits: pixabay.com

May these Yuletide spending tips help you survive the season with your wallet still intact!

Sources: 1 & 2

Your Ultimate Guide To Financial Literacy: What It Is & How To Improve It

DEFINITION

Financial literacy is the ability to understand and efficiently use various financial skills including financial management, investing, and budgeting. Financially literate consumers not only manage their money with confidence, but also have a better chance of handling the inevitable ups and downs of their financial lives.

It is the foundation of your relationship with money, which enables you to create a lifelong journey of learning. It will help you understand how to prevent and manage financial issues as they arise. The earlier you start, the better off you will be.

On that note, here are the advantages of financial literacy.

UNDERSTAND HOW MUCH YOU SPEND & EARN

When cultivating financial literacy, establishing a budget can give you a clear understanding of your expenses and income. Once you have a budget in place, you will be able to track your spending and revisit your spending plan regularly. With the variety of budgeting methods such as 50/30/20 plan, you can choose one that suits you best.

PAY OFF & AVOID DEBTS

Searching for the lowest interest rates when comparing loan terms can help you save a substantial amount of money over time. If you already have debt, financial literacy can help you select the best methods to eliminate your debt. 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.

WORK TOWARDS FINANCIAL SECURITY

Saving for retirement will enable you to secure your future. As you become more financially literate, you will be able to examine how much you need to save to obtain your retirement plan. You will be able to carve your action plan too.

WAYS TO BOOST YOUR FINANCIAL LITERACY

1. SET A BUDGET

Track your earnings and expenses each month by using an Excel Spreadsheet, a ledger, or a budgeting application. Your budget should include your incomes (e.g., investments and paychecks), fixed expenses (e.g., rent and utilities), variable expenses (e.g., shopping and travel), and your savings.

2. PAY YOUR BILLS ON TIME

Stay on top of your monthly bills by making sure that payments arrive on time. Consider taking advantage of automatic payments or signing-up for payment reminders (i.e., by email, SMS, or phone call).

Image Credits: unsplash.com

3. BUILD YOUR SAVINGS

Building your savings will help you reach your financial goals. Decide how much you want to contribute each month and stick to it.

4. CHECK YOUR CREDIT SCORE

You can request your credit report from Singapore’s credit bureaus. Companies assess your creditworthiness by looking at the credit score. Having a good credit score has its perks such as helping you obtain the best interest rates on loans and credit cards.

5. MANAGE YOUR DEBTS

Utilize your budget to manage your debt. You can devise a plan to reduce your monthly spending and increase your monthly repayment. Develop a debt-reduction plan such as paying for the loan with the highest interest rate first. If your debt is excessive and overwhelming, you can contact lenders to re-negotiate repayment or find a debt-counselling program.

Sources: 1 & 2

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