It is essential to equip ourselves with the current trends of finance to keep up to date with the financial information. In most cases, people tend to ignore the fact that good financial habits are practised and become a reality at the end of the day.
When receiving a paycheck month-end, few issues go around in a person’s mind over how to spend the money. As such, there is a need to have some tips that would help build good financial habits and dealing with loans, especially in Singapore.
Some of these tips are;
1. Living within your means.
When college graduates get out of school, they are excited about the new life, not knowing that there is a tomorrow. They spend more than they earn and leave themselves with empty pockets. Whenever one has a strategy about living within the earnings, then this is the beginning of proper money management from the word go.
Having a specific goal is equally important, for instance, spending 80% of the salary and saving the rest for future use.
When young people start receiving the paycheck, it’s essential to have a spending plan. This helps to track the expenses and give a focus on what is necessary during a particular period. Various online tools could help manage the budgeting techniques, which would be of great use not only for the present life but even in the future.
3. Plan for retirement.
It’s important to remember that there is a need to save for retirement. In other countries, it is by joining the employer’s pension plan where the money will be directly remitted to the pensioner as retirement benefits. Usually, one of the advantages of such an agreement is that the money paid is tax-free. In Singapore, we have the Central Provident Fund (CPF). CPF allocates a portion of our monthly income into different categories for housing needs, savings needs and ultimately, retirement.
This means that you will save more than you could have spent if the money was paid directly to yourself.
4. Build a good credit rating
One thing that is essential to know is that if one does not have good financial habits, then the credit scores will be lower.
It prevents one from accessing credit facilities.
Building good credit leads to getting a chance to have a mortgage or even car loans approved fast. This is what determines your eligibility to get access to bank advances. Ensure that also if you access some loans through peer to peer lending sites, be disciplined, and pay on time.
The credit cards should also have positive reviews which will work for one’s advantage.
It’s even more shocking in the current day hiring process; employers use one’s credit rating to confirm the eligibility as a qualifying candidate. More so, insurance companies are not left out since the credit rate will guide them during the underwriting process.
This is how important a good credit rating can be.
Singapore is an excellent place to invest, especially in real estate. Good financial habits are not about living without loans, but it entails how you spend the loan facility that is available to you.
The monthly salary may not be sufficient enough to build a real estate and in such a case, opting to get a loan could be a way out to develop and start renting out to access passive income.
There are ways in which one can access loans in Singapore. However, there is a need to research and get the best banks that offer loans in terms of interest rates, credit scores and also turnaround time.
When applying for a loan in Singapore, below are some of the factors to keep in mind;
i. Decide your financial needs, for instance, real estate investment.
ii. Research for the right loan with the right bank.
iii. Look for alternatives to what other lenders are offering.
iv. Eligibility- This is concerning the credit scores.
v. Fill in the application forms and attach all other documents requested.
vi. Forward the application for loan processing.
After the loan has been processed, one critical thing that a person who has good money management habits is to put the finances to work immediately. This enhances completion of the project fast, and the returns will start streaming in. By doing this, repaying the loan will not be a hard task since the loan was fully managed from the starting point. This brings us to a point on how the borrower can fully control the loan.
Below are some of the tips on how to manage a loan.
· Give priority to repayments– Do not allow yourself to get into arrears. This will mess with the credit score, and the lending institution will lose confidence in you.
· Pay off high-interest rates– Evaluate the loans that have high-interest rates and endeavour to pay them off as soon as possible. This will be a saving that can be used at a later date.
· Reduce on your monthly spending costs– In most cases; loans consume a considerable portion of the monthly paycheck. It’s essential to organize oneself and ensure that costs are reduced to give room for repaying the loans without so much of a hassle.
· Before signing for a letter of offer, always negotiate for lower interest, rate-Banks have relationship managers who would not want to lose you for a competitor.
Word of wisdom.
Peer pleasure can ruin one’s financial goals by impulse spending. Rather than that, once you track your expenses, only spend what you planned for; pass on the good finance habits to friends who could also benefit. After all, birds of the same feather fly together.
Once you orient others, they will have a reason to celebrate a good life in later years, and most likely this will extend to a lifetime program.
Therefore, keep these five things in mind when it comes to good financial habits.
· Upbringing- This is about your age and your future goals.
· Salary- How much one makes in a month.
· Loans- Account for all advances and manage them well.
· Expenditure- Mind about your spending.
· Savings- How much one can set aside per month as savings. This depends on one’s paycheck.