When a person or organization burrow some amount of money with an interest rate and committed to paid back in future is called a debt. It can be unsecured or secured loan. A person can take the loan for any purpose but after completion of that period, he needs to pay it back with the decided interest amount. Sometimes people think little debt will not cost more but it gradually increases along with the increasing amount of interest and becomes a big debt. For an instance, when you make a small purchase by using a credit card then after a short period of time this amount becomes bigger because of the addition of interest rate. Even the licensed money lenders are also giving money as a low interest rate loan within a particular interest amount. The borrower needs to pay the total amount along with the interest amount. In this article, we are going to discuss the top 9 reasons for which the debt is bad for you.
1. Debt encourages you to spend more than your budget
It is a major fact about the debt that it convinces you to spend more amounts on certain even when you cannot afford them at all. When you have debt option you get more excited and attracted towards new things and try to purchase them without thinking about the interest you will pay in future for this. When the time comes for payment you will realise the value of that money you spent on these unnecessary things. In this term debt is definitely bad for you.
2. Debt will definitely hurt your credit score
If you start comparing original loan balance and credit limit with your available debt amount then you will get to know that your credit score is very low. Even if you are not purchasing your loan amount or credit card, still your credit score will definitely affect the cost of the product and service you have taken before. You should Stay Away From These Mistakes that Ruin Credit Score in Singapore
3. Debt is using your future earning
Whenever you use a credit card or take a loan you are actually borrowing that money from your future earnings. Just imagine you
are spending that amount which you are going to earn in future. If you are borrowing the money from a professional money lender then it won’t affect your banking status but it will definitely affect your financial status.
4. Any kind of debt will charge you
You are signing a loan amount or you are using a credit card for your shopping, any kind of debt it will be you will pay a big amount for that. There is nothing free available for you. Normally, you pay a particular pricing amount while creating the debt. In the future, that amount will deduct in the form of interest. The late you are planning to pay, the interest rate will be higher and the load of the debt will be higher accordingly. In such case, the only option is zero percent credit card or interest-free loan but those are also available within a limited amount and can be easily lost in case you default any of your pay.
5. Debt keeps you away from achieving your economical goals
When you are paying your debt amount monthly it will reduce the other expenses that you are planning to spend on other important things. So the more debt you take the more month installment you need to pay in future. So you will not able to fulfill the wish and desire of yours and your family as well.
6. Highest interest rate can double the product cost
When you purchased something by using your credit card and you are not able to pay the amount for a longer period then imagine the total payment you paid with interest are really the same values of your purchasing product. It will definitely the bigger value then your product cost.
7. Debt can cause health problems
When you have any kind of debt, it will definitely bring stress to your life. Because every day you only thinking of how to clear the payments very soon. The stress that you get from debt will cause severe health problems which include migraines, ulcers, depression and even some time heart attacks as well. So to take care of health and make yourself relaxed you need to avoid such debt which is really bad for you. That is why it is necessary to keep money aside as emergency funding as you won’t know when you will need it.
8. Debt can affect your marriage
Debt can bring unnecessary pressure which affects your other household expenses which automatically creates lack of finance for your family. It brings unnecessary arguments within your family. In some marriages, the small fights turn into the bigger one which causes to a breakdown of marriages.
9. Debt can keep you away from owning your dreamland or house
While planning for a home loan the bank verifies auto loan, credit card loan and student loan details. If your status is clear and you don’t have such loans then only you will be eligible for the home loan. In case of any kind of debt the bank organization will not allow you to any kind of loan. In such case, if you are planning to own a home through bank load then your dream will never fulfil. So before that, you need to clear all your debt.
Any kind of debt either taken from the bank or any money lender or a professional organization, it is not good for anyone. So
try to lessen your burden on debt and avoid borrowing money for any kind of purpose. Sometime due to some urgent or critical situation, we may need money that time if you cannot manage them borrow from any source but try to pay it back before the committed time frame. The fast you pay your loan the fast you will get relaxed and will able to concentrate on your other requirements. So for that, you need to plan every of your expenditure properly so that you can enjoy everything within your budget and you will not require any kind of debt in future.
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Debt is one of the things that many people wish to delete from their lives and vocabularies. Financial experts have revealed that many people in Singapore try to commit suicide when they realise that they have huge debt which they do not know how they get out of it fully. But do you that there are many goods that can make you get into debt.
If you compare between the bad and good debt you will realise that not all debts that you can take are bad. You can also realise that even bad debt cannot be bad enough especially if you keep at a reasonable level that corresponds to your income/ Some of the best reasons that can make you get into debt are:
Get a college degree
Comparison by financial experts among the college graduates in Singapore has shown that they earn more income than workers who only possess a high school diploma. These graduates do earn almost double the income that the individuals who have not attained any degree. Experts say that it can be a good idea if you visit any financial institution so that you can take out a student loan. You can use this loan to pay for the college fees in a degree in the job field where you can be paid high income.
Although financing the college education can be highly expensive, it is valued as the best investment that you can take as a parent for your children. The skills that the children get can enable them to expand their knowledge which they can use to invest and in turn be able to pay the debt without struggling. Do not worry when you take a debt to finance your education as it can be beneficial in your future life.
Buying a home
Many of the residents in Singapore consider the idea of buying houses as the best investment since their value increases with time. If you take out a mortgage loan that has the best terms and conditions, you will enable you to have an asset that is valuable once you finish in repaying your debt. You can look around for financial institutions that have the give you a loan and the best places that you can get a house. There are so many houses for sale in Singapore that you are buying when you have received a loan. These houses can be the best investment that you can make with your loan. Most people will set emergency money aside to pay for renovation fees and etc.
Ways on how to get the best mortgage
You can start a business if you have ever thought of engaging in business in future and you do have a profitable business idea, getting a loan from reliable and licensed moneylenders in Singapore can best way to start. Although a business has its own challenges and benefits it is a matter of taking a risk in your life. Once the business starts to do well it will be considered as if you have invested in yourself. If the business is profitable enough you will be able to pay your debt within the shortest period of time even before the debt period elapses. After that, you will be debt free and all the profit and the whole business will be yours.
When you start a business you will be able to control you’re your future and get the benefits than you would if you were employed. Although you will not be guaranteed of 100 % success, if you look at the residents of Singapore you will realise that many people who take out loans to expand their business have benefited them for many years.
Reasons that can make you not to go into debt
1. Going on vocation– It is not good for you to borrow a loan so that you can go on a vacation. You will not be able to get means of repaying the loan.
2. Buying designer shoes, purse, and clothing- This items do cost a lot of money and yet they do not last for long. These items will also not add any value to your life, it will only be for prestige. After that, you will suffer the burden of repaying the loan, even be forced to sell some of your assets so that you can repay the loan.
3. Buying luxurious gifts- There are some gifts that you can buy will cost your life. You will not gain anything by buying this gifts just to pleasing your friends. It is good that if you want to buy any gift for your friend just buy a simple one without taking out a loan.
4. Buying a furniture for your house- Furniture are one of the expensive items that do cost a lot of money. If you have new house avoid taking out a loan so that you can furniture. You can be buying the furniture slowing from your savings. Some of the reasons why experts say that it is not good for you to go into debt over this items is that they do not appreciate in value even if they are left for long period of time. All of the above items continue to depreciate as you are using them. You will actually be left with a huge debt and have nothing to pay the loan with. The best advice against the above items is to save so that you can finance them.
Good debt can also turn bad
Experts in Singapore have revealed that if you are not careful enough with your good debt, it can turn out to be bad. Some of the best ways on how you can avoid your good debt from getting bad are by:
You should avoid taking out a loan debt that is beyond your means. If you want to take a loan take on that can be able to cover your business idea, buy a house, cover your educational requirements. Avoid taking a loan then you need as it can be difficult for you to repay since the interest rates continue to rise up with time. Take a loan that you can pay within the shortest time possible. It is good that you budget the finances that you get so that you can keep your credit score to the correct standard. When you delay repaying your debt you will ruin your credit score.
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Retrenchment is an everyday occurrence, especially in today`s current economic climate. It’s not something that only happens to people you know – NO – it can happen to you too. Have you ever sat down and thought what would happen to you or your family should you lose your JOB or income? Do you have a plan “B” in action? And how will you overcome something like that? For years now, people have started to realize there is no such thing as “job security” anymore. Company downsizing, acquisitions, and retrenchment seem to be commonplace. People continue to wonder if there is an end in sight. On the upside of this, it’s good to know what to do in the event it should happen to you. Here are the top tips:
Have a financial nest egg
There are so many people that don’t think about having money set aside in case they are part of a company layoff. This is one of the most important tips for surviving a layoff. You will need money to purchase the basics such as food, gas for your vehicle and paying bills. The ancient rule is to have at least three to six months worth of funds available in the event of something like this.
Better yet, try saving at least a year’s worth of funds there is also financial institution such as money lender in Singapore that can also be of great assistance a time like this.You will need to reorganize your finances. Make a list of the things that you need and the things that you can do without. Let your family know that there will be sacrifices everyone will have to make. Ensure them that everything will be okay.
As you know this is easier said than done. However, your family needs to know everything is going to be okay. If you worry, they are going to worry which creates a lot of negative energy. This is the time when you will need to become focused. Now that the first reaction of shock is over and reality has set it, it is time to think clearly about what to do next. Remember that your time is yours now so take a week or two to look at your situation. Look at where you were before, where you were heading and where you would like to see your self. Be bold and think outside of the box you will be surprised at what you come up with.
Back in the day when people were being laid off, it was almost certain that they would get a severance package if they had worked for the company for a significant amount of time. The amount of pay would depend on how long they worked at the company. If your employer doesn’t mention it, ask them about it. Being able to get severance pay from your employer would ease the financial strain of surviving a layoff.
Look for employment
Unless you have a nice nest egg stashed, you must pound the pavement to look for another job. Attend job fairs and the unemployment office to get leads. It’s not an easy task, but you have to persevere and keep going. It’s important to be optimistic and hopeful even though it seems like it’s bleak. Surviving a layoff emotionally can boost your spirits and eventually, you will find employment elsewhere. When you get laid off from your job, your health insurance goes with it.
Go to the unemployment office
This is a step that you need to do as soon as possible and to get it out of the way. This will provide that extra income you may during tough times. Make sure your company has provided you with all the necessary paperwork, such as layoff notice/separation notice. Even if you don’t get severance pay, you will at least need to file for unemployment benefits.
This can help to tide you over while you look for another job. You will have some finances coming in. The sooner you file for unemployment benefits, the sooner you will start getting them. The amount of money that you would get is based on your previous salary. This too would help to ease some of the financial strain of surviving a layoff.
Consider a Career Change or Start a Business
Did you ever think that this layoff could be a blessing in disguise? You may have considered it before. However, you never pursued it because you had a job and didn’t have the time. There are several businesses you can start online for very little money. Do some research and see what you come up with.
Out The Box
For years you worked and lived in a box molded by your career and income. Now that you are retrenched you can break free of that mold and kick down those walls.It sounds and feels strange, but the reality is that you are now free, free to make your own choices free to live your life without any boundaries. This is the time to be creative so put your thinking cap on and think beyond those walls and boundaries.The best would be to take a pen and paper and start writing down your thoughts, break it up into the past and future, each with positive and negatives. WOW crazy! The past has more negatives, and the future has more positives.
In conclusion to all the above one can safely say that you are retrenched, but that does not mean total meltdown. There are effective ways to overcome retrenchment and job loss, and you do have choices, but it all depends on how you will use and leverage your choices. Each person’s needs are different, and only you will know what your needs are and what the solution will be, but the approach to the solution is always the same. Surviving a layoff is not easy for some people that are out of work. However, if they have families, they have to do whatever it takes to bring money in the home.
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Singapore is one of the most expensive cities in the world. Aside from that, its beauty is beyond five hundred word essay. It’s also a vacation destination for most people of the elite population. However, budgeting when living can be a pain in the neck but do not fret: these are the 20 ways to save money in Singapore.
1. Have an automated bank savings account
If you’re fond of withdrawing cash from your ATM for no reason, then the best option is let the bank deduct certain amount to your saving accounts. Anytime your salary is deposited to the bank, your savings is updated.
2. Eat cheaply but healthy
You don’t need to spend beyond $5 in just a meal. You have to choose a place where it offers the best service. The cheapest but delicious food in Singapore are at Hawker Centre. For instance, you can be offered a $1.4 breakfast set. You get to save huge sum amount of money at the end of the month yet you have eaten like a king. You don’t need to strain your pocket too much to take a meal instead of saving it.
3. Be punctual in the morning to Catch Up the MRT free Ride
As the saying goes, early bird catches the worm, this is absolutely true. If you practice waking up early, you will be privilege to be ridden for free by the MRT riders headed to the city. As long as their cars catches you in their designated stations at around 7:45 am in the morning. You’ll save more than you can if you wake up early in the morning. They offer discounts (50%) also if you miss their timings.
4. Buy only when you have to
You often find yourself buying something that is not in your budget plan, you ought to stick to your plan and buy only what is necessary to you. Don’t buy something because your neighbor bought it. You’ll save dollars of money by making your budget clear and simple.
5. Plan for your Groceries
Buying groceries every day is hectic and time consuming. You can imagine how you usually go buy groceries daily. At times you may end up spending more than you had plan, thus purchasing them in stock can save you lots of dollars.
6. Avoid saving your credit Info Online
It’s obvious that when you expose your credit card details on shopping sites, you may end up making impulse purchases. You should avoid the auto fill mechanism and sort to go for the manual entry.
7. Have a smart plan on your expenses
Do you wake up in the morning without a plan? You need to plan any of your penny you wish to spend. Saving should be your main priority rather than spending. Make your savings and expense plan be simple, Measurable, Attainable, Realistic and Time bound.
8. Give yourself a saving Target
Of course, if you plan to make a handsome savings, you need to give yourself an attainable target. It will act as a motivation to your target.
9. Save even when paying out debts (don’t pile debts)
Don’t let debts discourages you to saving. Make a plan on how you will clear your debts. Ensure there is a systematic flow between your savings and payment of existing debts. Not at all should let debt prevent you from making your savings.
10. Take advantage of the free park and avoid environments that may encourage you to buy unnecessary items
You can easily take advantage of Singapore’s best recreational Centre and parks without paying even a single penny. Changi Airport for instance, is not only meant for travelers but also for non-travelers who wish to hang and have a nice time. It offers some of the exclusive services like free Wi-Fi and a 24-hour food court.
11. Implement 20-50-30 principle
I am sure you have heard about 20-50-30 principles, but if you intend to save money even more in Singapore then you better put into action.20% as the minimum of your income should go to your savings, 50% be used on your groceries and utilities, and a 30% maximum used for miscellaneous usages. For instance, a fancy wear.
12. Make your car as an advertising decal
Do you own a car and you are troubled or way it can generate income? Okay, then I will let you know. I don’t mean making your car an Uber/Grab driver. You rather turn your car as an advertisement decal. Companies like Movo, can take charge of your car and you can be paid up to $300 per month by just making advert deco on your car.
13. Use clothes rental services instead of buying new
At one point in your-time, you may need to dress to certain occasion. It’s much expensive to go get a designer wear for just one occasion. You can rent the cloths for the occasion for just less than $130 for a month. You will end up making huge savings out of the creative idea.
14. Prioritize your needs
What is it that prevents you from saving? If there is need that you think you have to acquire to motivate you to save then you need to acquire. Prioritize your requirements. The least priority items should come last after sufficient savings has been made. Sometime if you are in need of personal loan, you might end up turning to banks and even licensed money lender.
15. Sell unused clothes on Refash
Did you know you can make money by selling those clothes that you no longer wear? Refash buy all clothes at a worthy price. You will have made the biggest choice by making money out of unused cloths.
16. Go for functionality rather aesthetic
Make savings by going for functionality of item rather than its look and aesthetic value. If you are acquiring a second-hand item and it provide services that it should, then don’t let your muscles strain because you need to make savings first.
17. Take advantage of the free classes there at sport hub
Do you spent lots of money going for sports in Singapore? Be economical and save by going to Singapore Sports Hub for free. They offer the best services and you will be fit without straining your pocket at all.
18. Adopt option instead of buying a pet
Purchasing a pet is expensive in Singapore. Adopt a pet and you will have save life and money. No need of spending money for something that you could have acquired for free.
19. Buy second-hand stuffs
Change your mode of purchasing stuffs. If you can be offered a second-hand item at a lower price, then you need to grab without hesitation. With application like Carousell, you will be able to save much by purchasing an item you desire at an affordable price.
20. Choose the best but cheap ride service
Don’t pay for a private car ride rather than going for the carpooling option. Carpooling application like Uber, Grab and neck comes will high discount for their customers.
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Our workplace should be a learning environment. Our jobs should have an impact on the way we handle your activities especially your finances. There are many invaluable lessons that one can learn about financial management from the workplace that will help us keep away from our esteemed licensed money lender.
In our workplaces, whether we work for a Multinational Company (MNC) or a Small Medium Enterprise (SME), our job scope
will in one way or another involve finance management. The question that should always linger in our mind is, “What difference does my job bring in my personal financial management?”
This article has put together some of the financial management skills that we ought to learn from our workplaces that will help us
put our personal finances together and keep our licensed money lenders at bay.
1. Personal Financial Planning
In every organization, whether big or small, whether for profit or non-profit, budgeting is a mandatory requirement. Budgeting is simply spending less than your earnings and planning for both the short and long-term. In the organization, financial budgets are done at the department level and consolidation is done thereafter.
The main goal of organizational budgeting is to keep the company afloat. The principle is that expenditure should be tied to a source of income and if the income is not yet realized, it would have to be borrowed, at an interest.
This should apply to our personal lives. You should cultivate a habit of personal financial planning: both for yourself and your family. For the salaried employees, this should be very easy for you as you understand clearly what your monthly income looks like.
A budget will help you keep off the traps of reckless spending beyond what you can sustain. Plan what to save, what to invest and what to spend on the recurrent expenditure.
2. Revenue Diversification
If you take a close look on the Statement of Comprehensive Income commonly referred to as profit & loss statement of
listed entities, you will realize that their source of income is more than one. An organization cannot be sustained by one source of income. The management has to think of other sources of income besides the core business.
Take for instance Singapore Press Holdings. Their main stream is Newspaper and Magazine. In the year 2013, the company generated $ 1 billion in revenue from newspaper and magazine business. In addition, Singapore Press Holdings generated approximately $200 million from their property development business.
This is a great lesson that as individual ought to learn. We should endeavor to have more than one source of income. Besides your
day job, think of other ways you can raise revenue for yourself and your family. You can invest in a blue-chip, dividend paying stock, Invest in property market, or even writing as I do.
3. Wise Expenditure: Asset Investment
The next thing you need to do after revenue diversification asset investment. A close look at the statement of financial position (balance sheet) of an entity will give you direction on how to spend your income. The balance sheet usually starts with Assets both non-current and current. The non-current assets are usually huge in figures.
They may include Motor Vehicle, Property Plant and Equipment (PP&E), Free-Hold and Leas Hold buildings etc. Other assets include Cash and intangibles. These assets are basically the “needs” of the company. They are responsible for generating income for the company.
As individuals we also have “needs” that need to be taken care of. Note clearly I’ve intentionally used the word “needs” and not
“wants”. Your needs are the necessities of life: affordable home, expenses on food, utilities and transport. Invest your income on assets that will help you meet your needs.
For example, Investing in bonds and stock, commodities and property is a great way of helping you meet your needs both in
the short-term and in the long-term. Your degree certificate fits well in the description of an Intangible Asset. It is essential when you are looking for employment or even advancing your career.
Your personal and diversified revenue may sometimes not be enough to finance your assets especially when it comes to huge capital based assets. In this case, you can approach a licensed money lender like a bank and take up a loan. A good example is a personal loan or payday loan.
There are things that will never fit in the personal balance sheet. Things like honey moon trip, birthday bash, and amacallan bottle at Zouk, $5000 worth of matrimonial bed, $4000 worth of leather seat etc. Such items cannot help you generate income.
4. Tax Break Maximization
A tax break is a savings on a taxpayers’ liability. It provides a savings through tax deductions, tax credits, tax exemptions and other tax incentives. You may have noted that big companies hire tax consultants to assist them in maximizing the available tax breaks.
From a personal level, you may not hire a consultant to assist you in your taxes. Nevertheless, some self-education on tax matters
can go a long way in helping you save significant money in the long run. Do not despise the little money you can save by just conducting some research just to gain knowledge. Always remember that knowledge is power.
If you are a victim of arguing with your credit card operator on waiving your penalties, consider spending more time educating
yourself on personal tax matters in Singapore and keep yourself updated.
5. Priority Expenditure
If you engage a business person whether in a MNC or SME, they will tell you that they have an endless list of items they need to
purchase. This could include new equipment to replace an old one, new computers, a nice pantry, a modern meeting room etc.
It is of critical to note that the needs of one organization will vary with the needs of another organization. For example, new
equipment will rank higher on the purchase list of a manufacturing company as compared to a company in the advertising industry.
This is not exceptional when it comes to individuals. It is a crucial discipline that needs to be cultivated. You need to categorize your expenditure in the order of their priority. Just as the organizational needs are different across firms and industries, individual needs vary.
Top-class education for the children may be on the top of the list of a certain individual and to another, a car is on top, and yet to another a house tops the list of the things to purchase. My needs will never be your needs but the most important lesson is to always prioritize your expenditure.
It is almost certain that we have come across some, if not all, of these financial management skills. This is a wake-up call to all
of us. It is time to put the learned financial skills into practice in our individual lives.
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Mid-life crisis. I am sure that most of us have heard of this term umpteen times, whether if you understand or not understand what exactly this means. What does it feels to be encountering a mid life crisis? In order to understand the mid life crisis, we need to study our life cycle. Take a look at our country, Singapore as an example. She will be 53 years old in 2018 and while we have progressed significantly as a country over the past decades, apparently we are still trapped in a mid life crisis. Often, many would approach licensed money lender in Singapore to seek temporary help for advance cash flow issues.
As of now, the critical domestic financial challenges faced by Singaporeans can be attributed to the following factors:
Rising costs of living
Slower economic growth
Continuous influx of immigrant workers
A more privileged youth with higher materialistic expectations
How Did It Emerge?
It all begins with us being born, obviously, but this article is about how we give birth to the problem. We grow up, go to school, and finish college. It’s the golden era of our comfort years. All we need to do throughout this period is concentrate on our studies and have fun, ask for money from our parents, blow it up on our friends.
Basically, there is no concept of earning money or saving money, the most worried you can get might be about your grades or finding your identity. Then we look for a job post our graduation or study further. If we decided to study further, our previous lifestyle of not having to worry about anything apart from grades continues.
This is the time you realize the power of money and start working towards earning more and more. With little or no effort, you keep getting regular increments and regular promotions and you are very satisfied in life. This is the time when you are in your mid 20s and start to find your soul mate because your professional life seems sorted.
You get married, have kids, and raise your family. This is a time when you mostly reach the epitome of happiness because you have a luxurious life and a nice family thanks to a stable job and a steady flow of income. Throughout your thirties till your forties you get to enjoy this happiness.
Post forty five is usually the time when your regular salary increments start to decline no matter how much effort you put in and your professional career starts to plateau. This is the time you start getting worried about your income because by now you are used to a certain kind of a lifestyle. When this worry starts pricking your conscience, you, my friend, have just hit the mid-life crisis.
Reconciling Expenses with Savings
Income includes your active and passive income as well as your expenses and savings. You need to learn how not to over indulge from the start, basically you need to know how to live within your means and this process begins as soon as you start earning in your twenties. Even though you think that you don’t need to, you very much need to get into the habit of saving money. No matter how small the amount is, keep a savings account and deposit some amount of money in it, preferably a minimum of 10% of your income.
Your thirties is the right time to think about investments so start gathering as much knowledge as you can about the things you can invest in – while some people swear by property, some people might advise you to invest in stocks. Learn about all this and decide what suits best for you keeping in mind the expenses that your family requires.
What you need to do is learn the art of balancing expenses
In your forties when you are approaching your mid-life, you will have to be prudent regarding the money you spend to avoid a mid-life crisis. It is the time when expenses shoot up significantly because your children are growing up and you need to regularly invest in their higher education, and deal with the fact that your salary increment may not be rising at the same pace. By this time you must have an alternate source of income, a means of getting passive income along with your main source, that is, your job.
Thanks to your amazing planning and savings you will be able to enjoy our fifties, whether you retire voluntarily, involuntarily or even if you are still working because the pressure will be off of your head. If you made good investments in your hay days, they will be bearing fruit today and you will not have to lose out on anything just because you have retired. This is a sure shot way to avoid a mid-life crisis.
Now that you know what steps to take at which age, it might become easier for you to never worry about money in your life. Whatever you do, always remember that the key is to save money because money saved is money earned. So, as soon as you start earning, you must start saving. Even a little money right now will go a long way later on.
https://credithubcap.com.sg/wp-content/uploads/2017/12/The-Path-to-Mid-Life-Crisis-in-Singapore.jpg7001200Carina.Whttps://credithubcap.com.sg/wp-content/uploads/2016/08/credithub-logo-wh-400.pngCarina.W2017-12-15 11:10:332017-12-22 11:23:56The Path to Mid-Life Crisis in Singapore
Let’s be real frank right here – Money makes the world go round, you couldn’t agree more with this, isn’t it? Being ranked as the top cities to live in, Singapore is unfortunately the highest cost of living city in the world. In fact, just when you thought the cost of living couldn’t get any higher, you are so wrong. Everything is increasing, like the healthcare, housing, petrol, food, basic necessity but the only one that stays stagnate would be our salary. Most Singaporeans couldn’t agree more with this and it is extremely difficult to save up on monthly basis due to the monthly bills and commitments as well.
According to Singapore Business Review article, almost half of the Singapore population have little or even no savings at all. This is a saddening polling results. Fortunately, this is not the end and there is still possibility to turn your financial situation 180 degree around. It is time for you to take a leap of faith, you need to start building up an emergency fund and the future you will be thankful.
Why is emergency fund necessary?
We all know that accident happens, anything can happen anytime and at any point of time. Unless you are equip with special superpower to predict the future, if not, there is absolutely no way you can know when will an emergency arise. All it takes, is just one major event to drain you out and leave you in debts. Times like this, what are you supposed to do? Approach your friends and families for help? How much help can you get? What if you don’t?
This acts as a financial buffer for you as it protects your savings from unforeseen circumstances such as:
1. Medical Bills: In Singapore, most of us are protected by MediShield and able to use Medisave, but you still need to take out a sum of cash to pay off your expensive bills. It all depends on the conditions, the length of your stay and the class of your ward. All these can easily drain off your savings.
2. Home Appliances or Auto repairs: Having to repair your car and aircon can be quite be quite draining as the cost can go up to 3 digits or even 4 digits, depending on the conditions.
3. Loss of jobs: As Singapore is experiencing economy downturn, the retrenchment rate is rising. In the event of retrenchment, despite having one month salary compensation, you are expected to have at least 6 months worth of savings (after you minus the expenses) to keep you financially afloat.
Hence, this is why you should always have an emergency fund!
How much do you need for your emergency fund?
First thing first, how much do you need to your emergency fund? How much is considered enough?
There is no absolutely answer but it is good to always follow a guideline and it also depends on your monthly income. If you are expecting a fixed income every month, the possibility of saving up for an emergency fund will be more easy peasy as compared to those doing part time casual jobs. Having a fixed income monthly will be easier as you have a calculations as to how much cash flow you are expecting each month.
Ultimately, the most ideal plan will be building an emergency fund of at least 6 months worth – factoring the remaining monthly savings after you minus the expenses such as insurance, utilities, transportation, groceries, credit cards repayments and etc.
How do you build your emergency fund?
There is absolutely no short cuts to save up an emergency fund. It boils down to a few factors such as your financial situation, you individual discipline and determination as well. Emergency fund might take slightly longer time to build if your monthly salary is acceptable whereas your expenses are very high. But then again, you know that everyone has to start somewhere and it is essential to start building because you are unable to foreseen any unconventional events.
Let’s say for instance, you make a fixed income of S$4,000 a month but your liabilities take up about S$3,000 – that leaves you with about S$1000 a month to put into your emergency fund. If you need at least 6 months’ worth of expenses to build up your emergency fund – that means you’ll need at least S$18,000 – which will take you 18 months to build if you put in S$1000 every month.
Do remember that it is not all about the speed, it is about the process and getting there. No matter you take how long, I am sure you’ll reach your goal eventually. There might be distraction along the way but you should know what’s best for yourself. If you have free time on your rest days, you might want to take up side income to help you achieve your goals.
https://credithubcap.com.sg/wp-content/uploads/2017/11/Emphasising-On-The-Importance-Of-Emergency-Fund.jpg7001200Carina.Whttps://credithubcap.com.sg/wp-content/uploads/2016/08/credithub-logo-wh-400.pngCarina.W2017-11-03 10:00:112017-12-08 17:29:02Emphasising On The Importance Of Emergency Fund
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