Setting Your Financial Resolutions
The new year is almost here! While people usually set their new year’s resolutions at this time, have you ever thought about setting your financial resolutions? And after the rollercoaster year of 2020, with Covid-19 and the economic downturn, now would be a good time to make some personal finance goals. Check out our list to help you!
- Plan your budget
Planning your budget is an important first step in managing your finances. Read our guide on planning and budgeting, or use our budget calculator to help you.You should start by listing down what you need now, what is useful but you don’t need now, and what isn’t essential. For example, rent, bills, loan repayments and insurance are essential. Don’t forget to also set aside some money for savings. You can then use any money leftover to spend on what you want!
- Build an emergency fund
Set aside a certain sum a month for emergencies, especially for an economic downturn like we’re going through now. Anything can happen. Whether your car breaks down, you need medical treatment, or even house repairs, you’ll want to make sure you have extra money for emergencies. Aim to save at least 3 months of your expenses.
- Review your loan repayments
If you don’t pay your debts on time, you’ll end up getting charged more in interest. Do you have extra cash this month? You could use it to pay more of your car loan so you can finish your loan earlier. Depending on your loan structure, the sooner you pay off your loan, the less you’ll end up paying in interest in the long run.
- Grow your retirement fund
EPF retirement savings have been in the news a lot lately because of the withdrawals allowed under Budget 2021. But if you can afford it, you should focus on saving more in EPF instead of withdrawing. You can also contribute more through voluntary contributions. EPF guarantees a minimum dividend of 2.5% a year, and has paid an average dividend of 5.6% for the past 20 years – And the more and longer you save, the more returns you’ll get.
- Treat yourself
After a while, it may feel frustrating to keep saving and not spending on something you really want. You may find it hard to stick to a strict plan in the long term, and may return to your old habits. If that’s the case, you may want to reward yourself with something that makes you feel good after achieving a savings goal. But plan your treats carefully. Decide how much and when you’re willing to spend on a treat. If you can look forward to a regular treat (as long as you achieve your financial goals), you’ll feel more motivated to continue your savings habits.
No matter how big or small your financial resolutions are, we wish you the best in achieving them, as well as a Happy New Year ahead! If you want to learn more about how you can achieve your financial resolutions, check out these posts:
How to grow your retirement money with EPF