Imagine your worst money nightmares showing up at your doorstep screaming, “TRICK OR TREAT”. Unlike the kids dressed up as ghosts or monsters, these nightmares don’t want your candies or chocolates. How do we stop them from haunting our every waking moment?
It’s Halloween and what better time to tackle our worst money nightmares than now. If you are currently being haunted by a money nightmare (loans and mortgages and bills, oh my!), fear not. Follow our clever money management advice and you’ll soon escape its skeletal grasp.
Your Money Nightmare:
“My bills pile up faster than the body count in a zombie apocalypse!”
With shopping events like 11.11 and buy-now-pay-later schemes, it comes as no surprise that young Singaporeans today are at an even higher risk of overspending. When we don’t see actual money leaving our hands, we tend to underestimate our expenses. What is really happening is that we are clocking up credit card bills that will send us, and our savings accounts, into shock at the end of each month.
See: Buy now, regulate later? Are 'buy now, pay later' services good for cash-strapped consumers?
“When your idea of financial planning is paying your bills first then thinking about investing after, it can make growing your money a lot more challenging,” says Deborah Tan-Pink, Revolut Singapore’s head of communications, who is also a personal finance podcast host.
Take a proactive approach when it comes to your expenses. The easiest way to manage your monthly expenditure is to decide how much you would like to spend on shopping, entertainment and dining out, and top up a debit card with that amount. When you have burnt through that amount, make a commitment to not use your credit card to pay for other things.
“The best thing about smartphones is that there are so many apps you can use to help you draw up a budget. Gone are the days when you had to manually write down every purchase in a notebook,” adds Deborah. “Revolut has a budget tool embedded into the app. It analyses your spending habit every time you pay with your Revolut card. This way, you get better at budgeting the more you use the app.”
Your Money Nightmare:
“What’s this sorcery that’s causing my money to disappear?”
Even when you think you’re keeping a tight lid on your spending, you might want to comb through your statements to see if there are money-suckers you can eliminate.
The first culprits are auto-renewable subscriptions and GIRO payments. While these help to make sure we pay our bills on time, they may also represent things we don’t actually need. Don’t make the mistake of thinking, “What’s $0.99 a month? I just want to unlock this filter for a photo!” These can easily add up and before you know it, you’ve lost track of all the subscriptions you’re supporting.
Another big money-sucker to watch out for is insurance. Sure, we should all have adequate coverage in case of accidents or illnesses but overpaying for insurance is a real thing. There is no such thing as a one-size-fits-all insurance plan. The time you invest in talking to a trusted financial advisor so they can work out what you need is going to be worth it. Key questions to ask yourself are, “Do I need this rider?” and “Do I need to pay extra for the life insurance plan that came with my credit card? Is it optional?”
Finally, for those servicing a mortgage, you might want to look at refinancing it every few years or so when the low introductory interest rate expires. “Ultimately, what we are looking for are things we can trim away so we know exactly where our money is going,” says Deborah.
Your Money Nightmare:
“There’s something strange in the neighbourhood. Who do you call?”
Life is unpredictable and because of that, we sometimes find ourselves in financially vulnerable situations. Rather than wait for someone to come rescue us, we should always be prepared to bail ourselves out. Cue the emergency fund.
As we build up our savings and grow our investments, don’t forget to set aside some money for that proverbial rainy day. This will keep us from dipping into our savings or prematurely wrapping up investment plans. A general rule of thumb to follow when it comes to your emergency fund is that it should cover six to nine months’ worth of bills, expenses, and loans.
“A little does go a long way. Revolut allows you to round up your payments and save this ‘spare change’ in a vault,” adds Deborah. “This helps you build up your savings in a way that’s almost painless. And, when you need to withdraw this money to cover an emergency, you’ll not be penalised for not keeping a minimum sum in your account.”
For more stories about where the money flows, click here for our Capital section
Clarity and control are the two main things that could help prevent a number of money nightmares from growing into full-fledged horror stories. If you need professional help managing your money, be sure to approach a financial advisor you trust.
