Times are tough, but our parents and grandparents may most likely disagree and remind you that they had it even worse. There’s no point in arguing, but the key takeaway is that money has been and will always be an important resource that you should learn how to manage well.
According to research, the average salary in Singapore is just a few hundred dollars shy of SGD 6,000 a month. For the usual full-time employee, after a number of deductions and mandatory contributions, this comes to about SGD 4,500. The actual figures depend on the industry you are employed in, but this is the starting ground for most working folks in Singapore.
Obviously, the fastest and easiest way to get wealthier is to increase your income. You can achieve this by either getting a raise or getting into business, but we all know these options are not always possible or feasible. A more realistic approach is to look at what you have and to learn how to handle your money wisely so that you can create wealth in the long run. This is the way even some of the richest business tycoons started.
So how can you go about living a more comfortable life with your current income? Here are some sensible money management tips that could help:
Set Your Financial Goals
Oftentimes, we think that anywhere from here is good enough. The biggest downside to this is not getting anywhere at all because you do not have a clear idea as to the wealth you wish to create. The “SMART” rule applies not just in life or business objectives, but also to personal financial goals as well. They should be Specific, Measurable, Achievable, Realistic, and Timely.
Take time to sit down and indicate your financial goals in these terms. A valuable tool that you can use in this exercise is a financial calculator that can project certain outcomes based on the money that you currently have. There are many types of financial calculator online to illustrate the growth of your savings, for instance, or the monthly amortization for a mortgage.
Save First Before You Spend
You might have heard this adage already, but in reality, it is really difficult to practice. A good trick is to think that you are paying yourself first. Imagine that when payday comes and you spend it right away on shopping or eating out, you are giving others good business while not looking out for your long-term financial welfare. Your salary is compensation for the hard work that you gave your employer, right?
Setting aside money means rightfully rewarding yourself for a job well done. As experts advise, save at least 10 percent of your income and then proceed to pay essential bills such as those for utilities and mortgage. Whatever is left of your money can then be used for your daily expenses.
Stick to a Budget
After paying yourself, it does not mean that you can throw caution to the wind and spend what’s left of your income mindlessly. To reach your end goal of growing wealth, you ought to be even more careful how you spend this remaining amount of your regular income. Drawing up a budget is the surefire way to help you manage this, and a good way to start is by determining your wants versus your needs.
Simply put, needs are things that you cannot do without everyday such as shelter, food, clothing, transportation, and the like. Wants, on the other hand, are material things that you wish you had but may not really improve your life in a significant manner. However, there are a number of ways you can fulfill your basic needs and they have varying costs. Setting a budget can help guide your choices and allow you to realize even more savings as you strive to cook more meals at home, for instance, rather than dining in a fancy restaurant often.
Research and Invest
Now, with even more surplus from your usual income after having fulfilled all your needs—and possibly even a bit of your wants—you can gain the opportunity to create more wealth through investments. Basically, you can place your money in bonds, which are securities that earn you interest as you lend money either to companies or the government. There are also bank products where you can place your money and enjoy interest earnings as well. Of course, you can also buy shares of publicly listed companies in the stock exchange.
There are a lot of ways by which you can invest. Even if you are a beginner, don’t fret as there are numerous resources available online, as well as experts you can ask so that you can make the best investment decisions. Don’t hesitate to read up and educate yourself on these matters. Remember, every billionaire started small, and there are no stupid questions when it comes to knowledge and education.
Enduring the daily grind at work will definitely become more rewarding when you are able to manage your money properly, and you will see that creating wealth does not necessarily mean scrambling for ways to earn more but simply learning how to make the most of what you currently have.
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