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Turn Your 2018 Money Resolutions Into Reality

It all starts with a dash of imagination…

Vividly envisioning where you are headed improves the likelihood of meeting your financial resolutions. Allocate at least a few minutes of your day to contemplate on your past experiences as well as your current standing. Afterwards, visualize the financial situation that you desire to experience in the future. Some people may find satisfaction in their year-round travels. While, you may find serenity through altruism. The mere act of visualization will motivate you to reach the goals that you set.

Plan to start small…

Like anything in life, you must have strategic plans. Money resolutions such as paying off debt or building retirement savings are not always easy! This is why you must commit to small things first. Commit yourself to a “small” task that you will accomplish for the rest of the year. Consider writing down every dollar that you spend. For the adjustment period, you can write down each transaction in a notebook or in a journal. Awareness is increased through the mentally exhausting act of writing. It is exhausting in a sense that it activates different parts of the brain. The enhanced brain activity improves your attention and memory.

As the act becomes second nature, you can turn to electronic devices for help. Find an efficient budgeting app or a software to track your transactions. Keep a record. This will help you spot the weaknesses and strengths of your budget. Please adjust accordingly.

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Divide and conquer…

Absorbing the essence of all your financial resolutions is overwhelming! Try dividing a single goal into bite-sized pieces instead. Focus your efforts on a goal before moving on to the next. Observe your progress by ticking off the “resolutions” that you have accomplished.

Remember to be as concrete as possible when identifying your financial resolutions. You may state something along the lines of avoiding credit cards for a month. Or, you may pay an additional of S$50 to your credit card debts. Aim to minimize your debt in a shorter span of time.

Parting thoughts…

Use affirmations to remind yourself that being responsible for your finances will impact your personal life and that of your family’s. Valuing your hard work starts with making few financial alternations.

Sources: 1 &2

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.

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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.

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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

Start 2017 Right By Creating A Year-End Financial Checklist

As we reach the end of the year, there are several things that you need to pay attention to.

DETOXIFY YOUR WALLET WITH THE DEBT DIET

The Yuletide season is all about merriment and festivities. Due to the overall positive spirit that it exudes, you may want to shy away from the looming shadows of your debt. I suggest that you pause for a moment. Now is a good time to acknowledge your credit score and to cut back on your spending.

Debt takes a toll on your relationships, your family, and your future. It is only hurting your financial health. You do not want this suffering to roll over the next year. This is why you must consider to go on the “debt diet”. The debt diet uses practical ways to help you get back on the right track. Read about it, here.

OPT FOR GROWING YOUR WEALTH

It comes as no surprise that the newbie investors are apprehensive when it comes to the timing of their initial stock purchases. However, it is important to realize that time is your ally whenever you first invest.

The compound interests of your strategic investments will add up despite the current condition of the market. You will most likely have time to recover. This idea may seem like common sense to you, but there are many Singaporeans who wish that they started investing earlier on.

KEEP YOUR INSURANCE POLICIES IN ONE PLACE

Insurance is your safeguard against unforeseen and unpleasant events. It is a way to minimize your risks and cushion your potential losses. If you are a client of several insurance companies, it is a chore to hold all the policy documents. This is where PolicyPal app comes in. It is an app that allows you to keep all your insurance policies in one place.

After collating your policies, get a summary of your overall coverage. This will help you to decide if you have too much or too little policies. For example, you may avail the AIA GLOW OF LIFE (Critical Illness Insurance) instead of adding a special rider to cover female-focused diseases.

AUTOMATE THE PAYMENT OF YOUR BILLS

December is a hectic month! To save valuable time and effort, consider automating the payment of your bills. Schedule electronic transfers thru your internet banking feature.

You may also set up a bank GIRO. GIRO payments take a substantial amount of time. This is why your money must be available at least 3 working days before the bill’s due date.

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Doing an annual review of your finances can help you spend and invest wisely for the upcoming year. Take the pro-active route to financial wealth!

Sources:1, 2, & 3

Mind-Blowing Facts About Debt

FACT #1: SINGAPORE’S DEBT-TO-GDP RATIO RANKS THIRD IN THE WORLD

With a Debt-to-GDP ratio of 382%, Singapore ranks third in the world according to a 2015 report published by McKinsey Global Institute. The global report found out that Japan lead with 400% followed by Ireland and Singapore.

This significant percentage includes the total debt of the government, households, and non-financial corporations. It comes no surprise that a large part of the country’s debt hails from the corporate sector.

FACT #2: OVER 9 MILLION CREDIT CARDS WERE ISSUED

The credit card is one of the most powerful tools of our nation’s consumers. Would you believe that the summation of the country’s credit card debt is worth over S$5 billion. All these are in the form of balances rolled over to the next statements. Shocking and scary at the same time, is it not?

Furthermore, over 9 million credit cards were issued in the past decades as of November 2015. I can only imagine how this number will grow after a year!

FACT #3: OVERWHELMING DEBT IS ASSOCIATED WITH MENTAL HEALTH ILLNESSES

A review of 65 studies published in the Clinical Psychology Review showed that there is potent association between mental health illnesses and debt. In fact, your likelihood of having a mental health problem is about 3 times higher if you have debt. This is because debt is a common stressor.

It can lead to the feelings of helplessness, hopelessness, and low self-esteem. According to Dr. Nadine Kaslow of Emory University School of Medicine, these three are risk factors for depression.

FACT #4: HOUSEHOLD DEBT IS SOARING IN THE RECENT YEARS

Singapore is a crucial financial hub across the globe. At 77% in 2013, its household debt relative to the GDP is among the highest rates in the Asian countries. It evidently rose from 2007’s rate of approximately 64%.

The rapid growth in the recent years were in accordance with the booming property market.

FACT #5: DEBT CAN CONTRIBUTE TO DIVORCE

As mentioned a while ago, debt is a common stressor. It can negatively influence relationships and marriages due to its alarming nature. Psychology Today found that couples who argue about money periodically were less likely to divorce over time than those who argue about money on a weekly basis.

FACT #6: YOU MUST OWE AT LEAST S$10,000 TO BE BANKRUPT

An individual becomes bankrupt if he or she owes at least S$10,000 and has no means to pay for it. It starts with the filing for bankruptcy by the creditor or the debtor. A deposit of S$1,600 to the Official Assignee (OA) is required. The OA is the authority that is responsible for selling as many of your assets as possible to repay your creditors.

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The effect of bankruptcy does not only take a toll on your finances but also on other aspects of your life.

Sources: 1, 2, 3, 4 & 5

How To Conquer A Mountain Of Debts

Hiking up successfully to a mountain of debts is a difficult task to anyone but, it is doable. All you need to get started is the application of money management skills.

The first step is to take a hard look at your cash flow. It is important to track where your money is going through observing the previous months’ bank statements and receipts. If an expense category is not necessary then, reduce or eliminate it from your budget. This includes magazine or newspaper subscriptions, cable television bundles, postpaid plans, gym memberships, and so on. Doing so will force you to come out of your comfort zone and live by your needs.

Instead of frequenting the gym, you can visit the nearby parks freely to have a recharging jog. You may also view the publications and reading materials available at the library at no cost. Read more books about personal finance to supplement your journey.

Now, we move on to a type of debt that most Singaporeans fall for – the credit card debt. There were more than 101,000 delinquent debtors in 2015 alone. Not to mention, the largest accumulation of debt last year was a whopping $1,552,000!

Its pervasive nature gave rise to the importance of controlling our credit card habits. Begin by collating all your credit card statements. List down your current balances and corresponding interest rates. Put these in order by starting with the greatest interest rate and down with the least interest rate. Pay of the debts with the highest interest rates first as it will be the most beneficial move in the long run.

Create a realistic budget that incorporates what you discovered about your cash flow and your debts. Stick with this budget! When all these are said and done, it is important to maintain healthy financial habits. Keep yourself motivated by setting financial goals. Sharing your progress to the significant people in your life can encourage you even more. You may also make an illustrated board (e.g., filled with pictures of your dream house or vacation) to visualize your goals.

Image Credits: pixabay.com

The road ahead may seem impossible at the moment. So, you better hang in there!

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