Category Archives: Budgeting

Financial Planning Begins With Budget Analysis

Budgeting Analysis

Budgeting Analysis

Many of us may face this frustration where we do not have much money left before our next pay day. How come some of us are good in savings while the rest overspend? Do you want to avoid this frustration again in the future where money is always not enough?

Then it is time for you to look into budget analysis, otherwise commonly known as budgeting. It is advisable for you to take a note of your expenditure everyday, mainly in the five categories – family expenses, family overheads, personal expenses, taxes and luxury items / holidays.

Next step is to identify which expenses are the ones that is not necessary or which expenses you can reduce. For example, some loved to spend money on high end items. Instead of buying high end items, how about those which are of lower prices without compromise on the quality? Some of us love to go holidays frequently. Instead of going frequently, can you cut down on the frequency? Some of us love to buy the latest electronics gadget, Instead of keep buying the latest electronics gadget, can we continue to use our existing ones which are still functioning well?

There are many apps out there where you can keep track of our daily expenses. It is a good way to do budgeting but you must have the discipline to do it everyday. Else, after a while, it is back to the square one where you overspend again.

Another way to ensure that you have savings every month is to open a few savings account in the bank. One account is purely for savings for the future, one account for family expenses and overheads and one account for personal expenses. With different accounts, it will create a discipline in you so as not to overspend and ensure that you have savings every month.

Once you done your budgeting, then it is time to re-look into your existing insurance portfolio to see if you are sufficiently covered for your future. Should any unforeseen events happen such as critical illness, disability or even premature death, is your insurance payouts sufficient to pay for the expenses continuously for a period of time and how long can it last, given that inflation rate keeps rising over the years?

Is it time for you to review your existing policies now? It is better to make sure that you are sufficiently covered now than to regret when something happens.

 

 

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How to set up a fund for life’s emergencies

Source: Asiaone Business, 23 Jan 2016

Source: Asiaone Business, 23 Jan 2016

An emergency fund is a sum of money set aside to deal with emergencies. Some of the common circumstances when an emergency fund is needed are unemployment, vehicle accident and medical expenses.

An emergency fund can also act as a buffer against market risk so that stocks and property do not need to be sold at inappropriate times to meet emergency cash needs. This avoids situation when stocks are sold cheaply during a down market to meet emergency cash needs.

In order to know how to you need to set aside your emergency fund, first estimate your monthly expenses or your family expenses if you are contributing to your family as well.  Next, decide how many months’ worth of expenses the emergency fund should be able to cover. For singles, three to six months’ worth of expenditure should be sufficient. For married couples, the breadwinner should consider setting aside nine to twelve months’ worth of expenses in the emergency fund. Finally, decide on where to store the emergency fund. The emergency fund has to be liquid and accessible, and be exposed to as little risk as possible, such as a bank’s savings account.

Have you set up your emergency fund? If no, what is stopping you? Given current volatile market with more and more companies axing staff, what makes you so sure that your job is an iron rice bowl? How are you going to make ends meet should you lose your job? Please start budgeting now and force yourself to build your emergency fund.

“All cars have built in air bags in case of emergencies. We do not buy an air bag only when an accident is about to happen. This applies to your emergency fund too.”

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How much is your net worth?

Source: The Star / Asia News Network 7 Dec 2014

Source: The Star / Asia News Network 7 Dec 2014

Knowing your net worth will give you an accurate picture of your financial status which allows you to access your financial advancement or regression.

Your net worth is calculated by adding up the value of everything you own (assets) and deducting the sum of all your debts and liabilities. Having more liabilities than assets, will create a negative net worth. Over-borrowing or poor financial management could also snowball to a large amount of liabilities.

The truth is that increasing your net worth only comes from decreasing your debt and increasing your assets. Professionals recommend reviewing your net worth every six months to a year. Be reminded that your net worth is not constant and could be irregular throughout your adult life, varying on your income level and spending habits.

Successful growth in your wealth does not happen at an instant and requires cautious and continuously planning. This first step will give you an insight of your progress and foresight to improve your financial outlook to provide yourself with a financially sound future.

Have you calculated your net worth? Do you have positive or negative net worth? Which area of your expenses can you cut down to increase your savings? With the increased in savings, what are the financial instruments can you invest in to grow your funds for your future?

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Worst money habits millennials tend to have

Source: Asiaone, 5 Feb 2015

Source: Asiaone, 5 Feb 2015

As more and more millennials are graduating with a degree, they are able to earn good income after working for two to three years. However, this sudden burst of income can have a negative impact if they do not plan their expenses properly. The bad habits formed, if not changed, will definitely be a problem to them in future.

In Singapore, the percentage of credit cardholders with incurred debts beyond their annual income is about 3 per cent. Life-changing events such as marriage, financial downturn or medical problems can also cause a huge change in your financial stability. Acquiring good money habits will protect you from ‘financial storm’. One should be prepared to tackle money issues at any point in time, regardless how comfortable we are in our finances.

The 13 bad money habits that young people have include splurging on a car, not saving, taking up unnecessary loans, being a spendthrift, living on credit, not keeping track of their expenses, failing to invest, investing too aggressively, expecting their parents to save the day, not understanding finance, copying their friends’ spending habits, lending money to others and not having insurance.

Do you have the 13 bad money habits too? Are you savvy in budgeting – are you aware how many percent of your income goes to expenses and how many percent do you save? Which part of your expenses account for the highest percentage in your expenditure? Do you know any ways to save more money for your future or do you have any expenses which you can cut down more?

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Hawker food prices up by 10-20%

Source: TODAY, 21 Oct 2014

Source: TODAY, 21 Oct 2014

According to a survey of 503 hawker stalls by Consumers Association of Singapore (CASE), common hawker food prices have been seen increasing by 10 to 20 per cent from 2012. Hawkers associate the increased to higher rental, ingredients and wages. However, CASE, noted that prices are still affordable for the average consumers, with some hawker food stalls selling below the mode price – about half of the surveyed chicken rice and mixed-vegetables rice stalls are doing so. A chicken rice-porridge hawker mentioned that rise in her price of chicken rice is unavoidable due to higher wages per hour, from S$5 to S$8 per hour, and rental that rise up to S$8000 per month. There are also hawkers who insist in maintaining their food prices in order to retain their accustomed customers. A student said that he has seen rising food cost but serving portion decreasing too. Rising food prices will also make savings more difficult.

The rising hawker food cost will definitely prick most of us. If hawker food prices continue to rise, will you decide to pay a little more for café food in the future? Will you be willing to top up a little more to dine with better ambience or to have your meal in a humid hawker centre? Or will you cook at home so that you can cut down on your food expenses?

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