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Financial Management (Working Adults)

Updated: 12 minutes ago


A guide on how to manage your finances as a working adult

Build the habit of saving

  • Predictability is important part of financial security

  • Having a robust emergency saving pool will give you time to response to unexpected circumstances

  • Start each month by saving a percentage of your salary (20 t0 30%) and set aside these funds in a bank account that is separate from our daily expenses. A recommended amount is equivalent to 6 months of your monthly expenses. Discipline is important here


Setting a budget

  • Formulate a spending plan on your monthly expenditures

  • Be detailed so you can see where the money is being spent

  • The goal of a budget is to ensure that you are spending only within your means

  • Following a budget may keep you from overspending and incurring potential debt

  • Set a monthly budget that work for you and stick to it


Needs vs Wants

  • A 'Want' is something you wish to have in your life (Eg. Luxury goods, vacation, etc).

  • A 'Need' is essential or vital in your life (Eg. Basic meals, daily necessities, etc.).

  • Differentiate between your needs and wants

  • Start by prioritising your needs before fulfilling your wants.

  • Purchasing of wants should be done within your spending ability and considered carefully


Spend Smart

  • Apply for credit card only when you can confidently manage your finances

  • Choose credit card tailored to your spending habits and have rebate schemes that can stretch your dollar

  • Rebates may seem insignificant but every little bit counts and will add up in the long run

  • Credit cards can encourage you to spend more due to the ability to spend more in advance

  • Remember to pay your credit card bills on time as penalty charge on late payment are extremely high


Invest

  • Investing allow you grow your wealth and generate additional income streams

  • Invest small of money on a regular basis. Compounded returns are extremely beneficial over the long run

  • A $1,000 investment at an interest rate of 3% p.a. would have grown by 12% to about $1,100 in 4 years

  • Invest early as time is an asset, and having a longer time horizon allows your investment to grow

  • There are investment products available in the market depending on your risk appetite, capital and the time you are willing to stay invested

  • There is no one-size-fits-all investment plan, so reach out to trustworthy friends or professionals to get advice

  • The golden rule in investment is to invest what you can afford to lose



Written by: Chia Miao Ting | Designed by: Chia Miao Ting | Edited by: Jonathan Kuek

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