You’ve learnt quite plenty in school – from languages to accounting and even more complex matters. However, some things are just not textbook. We list down the 5 personal finance tips you probably didn’t learn in school – but should know anyway.
The 50/30/20 Budget Rule
Now that you’ve got cash flowing in, a simple rule to remember when it comes to budgeting is the 50/30/20 rule, made popular by Senator Elizabeth Warren. To put it simply:
- Use 50% of your income for non-discretionary necessities like food, rent/house payment, utilities, and transportation.
- Use 30% of your income for discretionary (non-essential) spending such as eating out, entertainment, vacation, and gift.
- Keep aside 20% of your income for an emergency fund (aim for three to six months’ salary is a good target), retirement, savings, and to pay off any debts.
Saving Doesn’t Make Your Rich
Yes, you were taught to save but spending less doesn’t always mean you’ll have more. Savings are a great way to stabilise your finances, but investing could make you wealthy. But before you start investing, there are boxes you would need to tick off to ensure you’re financially ready:
- Steady emergency fund
- Know your net worth
- Is it a short-term or long-term investment
- Understand the risks involve
- Know exactly what the money’s for
It's OK to Put Yourself Before The Kids
If you’re a parent, your kids’ education might be top priority. While that’s essential, it’s more important to have enough for retirement. You wouldn’t want to be a financial burden to them when it’s time for them to start their own family. With that in mind, a retirement plan would be great to have in addition to an insurance plan.
How Does Your Older Self Look?
People usually feel disconnected from their older self. They can’t exactly picture an older version of themself, so it might help imagining your 70-year-old self as someone else (and give them a name!). Envision this character – is she still working at a ripe, old age; or is she enjoying her golden years? The more you picture her, the better and easier it is for you to make your financial decisions.
Try out our Retirement Calculator to see if you’re on track to your retirement goals.
Financial Advisors Aren’t Just For The Wealthy
As we help you progress through your wealth cycle, gain access to a network of financial advisors through our SmartSearch tool. We might be used to the idea that only the wealthy would need financial advice, but getting professional help right from the start might prevent losses that could have happened on your own.
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