It’s a new year, yet again, and it’s time to set resolutions that we would
hopefully definitely keep.
Set and clarify your financial goal
Setting a financial goal is an easy thing to do, but you should also specify the amount that you want to work towards. Instead of just saying, “I want to buy an apartment”, come up with an estimated amount to work towards so you know how much to save. You should ideally also set a time frame so that it does not become a vague target without a timeline.
Having a goal is important to frame your mindset and make decisions easier. Splurge on a new phone, take a spontaneous holiday, or slack off on your side hustle? Remind yourself that you have a goal you want to achieve.
Decide on a spending budget, and stick to it
Come up with an amount you’d allow yourself to spend per month, and it is extremely helpful to track your spending so that you know what is a realistic and reasonable amount. Use January to calibrate by tracking every expense you make this month. Then, you can review your spending, and decide on a monthly budget for the rest of the year.
Develop a credit card strategy
Talking about spending, it is also time to have a credit card strategy if you don’t already have one. Whether it is cashback or miles, credit card rewards can be very substantial when you have a good strategy for your expenses. Cashback cards can give you hundreds if not thousands of savings each year, while mile cards can make business class tickets more affordable.
Sign-up promos are also very attractive these days, and not using credit cards for rewards is leaving money on the table.
Pick up a side hustle
I am a big proponent of side hustles, and I feel like everyone should pick up something to supplement their main incomes. Be it more traditional ones like tutoring, or relatively newer ones like ride-sharing/deliveries, additional income greatly assists you towards your financial goals.
I have a friend who even managed to start and grow a Tiktok channel into something that earns him an income in less than a year, and it’s focused on an area of his interest. You can work on something that you like, and then figure out how to monetise it.
Sort out your insurance coverage
Spending a lot on insurance actually does not mean that you are well insured. In my experience, many people overpay for expensive policies (the usual suspects: investment-linked policies, savings plans, and whole life plans) and are still woefully underinsured. Finding a good financial adviser is difficult, but you need to review your insurance portfolio to ensure that your coverage needs are met.
After your insurance is sorted out, you need to start investing automatically. Investing on an ad-hoc basis isn’t ideal for many people because emotions get in the way, and people are terrible at timing the market. Doing in on a recurring, monthly basis ensures that the investing gets done, and most people wouldn’t feel the pinch when money is taken out automatically each month.
Over time, money accumulates and one would find tens of thousands of dollars after a while, and that is something magical.
Plan for tax savings early
Instead of leaving things to the last minute, plan for tax savings earlier. This advice is more for myself, because I have been putting things to 31st December for the past couple of years, and I resolve to do better this year.
Rather than waiting until the last month (or last day) to do things like top up SRS or CPF SA accounts for tax relief, you can consider breaking it up into monthly amounts. This avoids last-minute rushes and anxiety, and also reduce the pinch of plopping a large sum at the end of the year. As a bonus, these funds can start generating returns (of course, you do need to invest the SRS funds) while it gets a negligible interest rate if it is just sitting in your bank for the greater part of the year.
What are your financial resolutions?
Got something unique or different from these? Share it with us in the comments below!
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