Are resolutions made for breaking? Well, it may seem to be the case but don’t give up just yet.
Research shows that those who make financial resolutions are generally in better financial shape than those who don’t. So, why not give it a go?
According to the 2016 New Year Financial Resolutions Study by Fidelity Investments in the US, people who make financial resolutions at the start of the year are significantly more optimistic, more debt-free, and more financially secure than people who do not.
Also, fulfilling resolutions translate to real impact. Of those who were successful in following through with their financial resolutions, 66% said they improved their financial situation.
Tick off these financial resolutions in 2018 for better financial health
Not sure how to get started with your financial resolutions? Here are some that you can add to your list.
1. Pay yourself first
Always try to set aside money every month for yourself. Ideally, it should be at least 20% of your take-home salary. You can set automatic transfers to a separate account and make sure not to touch those savings unless really necessary.
2. Stick to a realistic budget
Making realistic goals can help you achieve them with greater success. It’s unrealistic to slash your spending budget by half overnight. Set a budget that requires a little discipline but you are still comfortable to work with.
3. Save more by adopting the spark joy concept
Temptations are aplenty. Especially when there’s a sale or a good deal, it is hard to resist purchase for fear of losing out.
The good news is, one simple question can help eliminate impulsive buys that you will soon regret. That question is, “Does this item truly spark joy for me?” If the answer is a resounding “yes”, then go ahead and buy it. But if you are unsure, then perhaps you don’t need it in your life.
4. Get adequate insurance
Protect your savings from unexpected large medical bills. Purchase insurance and ensure that you are well-covered. Important insurance plans you should consider having:
- Integrated Shield Plan – an additional private insurance coverage typically to cover Class A/B1 wards in public hospitals or private hospitals and waive coinsurance and/or deductible
- Personal accident plan – to cover medical bills and protect income in the event of an accident, such as treatment for a broken arm caused by falling
- Term or life insurance – protects your loved ones in the event of death or permanent disability
- Critical illness plan – pays out a lump sum if you are diagnosed with a critical illness
5. Prioritise debts
Debts are expensive to service so sometimes it makes sense to pay down debt.
For example, if you have a S$10,000 savings bond that gives you 2% return per year (S$200) and a S$10,000 personal loan with 4% interest per year (S$400), you should sell your bonds to pay off your loan and save S$200 a year!
6. Maintain an emergency fund
An emergency fund is super important to tide you over during rainy days, such as during loss of job or illness. Aim for an emergency fund that is equivalent to at least 6 months worth of expenses.
7. Reduce your tax
Why pay more tax when you don’t have to? With the amount you save, you can use it on yourself and your loved ones or to fund causes you care about instead. Here are 6 smart things we can do that will reduce our income tax.
8. Invest wisely
If you want to get rich and aren’t likely to become the likes of Mark Zuckerberg or Elon Musk, then you better start investing wisely. Pick up a few good investment books and build an investment portfolio that’s right for you. If you are a newbie, you may want to start with exchange traded funds.
9. Keep a good credit score
A credit score is a number that reflects how likely you are to repay credit to your lenders. You can get your credit report with just S$6.42 from Credit Bureau Singapore (CBS) and improve your score if it’s not up to par.
10. Negotiate for a higher salary
Been waiting for a pay raise for the past year? Stop waiting and start asking! Let 2018 be a year of action. Here’s how to ask for a promotion or pay raise.
11. Stay on track for retirement
You will not regret thinking and planning for your retirement sooner than later. There are many ways to secure a comfortable, worry-free retirement.
For one, get your Central Provident Fund (CPF) sorted and on track towards your retirement goal. Consider topping up your special account (eligible for tax relief) or do voluntary CPF top-ups to all three accounts to take advantage of CPF’s higher compounding interest.
Also, there are three retirement decisions you should think about now with CPF LIFE.
12. Leverage on more free activities
When I read the post on 25 free and and fun things to do in Singapore, I was pleasantly surprised at the number of free things in there that I actually really want to do!
Is there something you have been wanting to learn? Check whether you can go for a course you like and claim your SkillsFuture credits. It’s awesome!