Financial Management (Working Adults)

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

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