If nothing else is working, make the following your priority for managing your financial goals:
Get rid of credit cards outstanding
Always aim to clear your credit cards bills and balance transfers starting with the highest interest rates. This should be followed by any term loans, education and renovation loan if any. Try not to only make the minimum payment on the credit cards and balance transfers as the incurred interests for your outstanding balances will only result in a higher outstanding balance. You end up paying a higher minimum payment on your increased outstanding balance in a never-ending cycle.
Ideally, all interest-bearing loans should be cleared as soon as possible, with the exception of mortgage loans. As home loans rates are currently at around 2%, funds may be allocated for other purposes if the financial returns can compensate for the risk taken.
Solution: Find out the institute where you are paying the highest interests for credits. Interest rates on the above mentioned are typically much higher than any financial returns you can get for your money. You may even consider cashing out coupon or cash benefits on your insurance plans or liquidating investment funds to cater to the purpose of clearing such loans. Note: Withdrawing coupon or cash benefit is different from surrendering your policy which could be disadvantageous to you.
Note: Withdrawing coupon or cash benefit is different from surrendering your policy, which could be disadvantageous to you.
Read about: Surrender your insurance policies: Make it the last option
Build up your emergency fund
Set aside some funds in saving, deposit accounts or anywhere u can withdraw with a minute notice for use in an emergency. A general rule of thumb is to set aside a minimal of 6 months of current expenses or 3 monthly of your salary. You never know when you will get retrenched or an unexpected life event occurs.
Solution: Start setting aside money monthly if you have not done so yet, prepare to cut down on expenses if you have to.
Plan for unexpected events
Ensure you are covered for health and protection in the event of a crisis before moving on to growing your money for other purposes. MediShield Life upgrades, early critical illness and disability income coverage can buffer and preserve your funds in the event of an unfortunate life event.
“Failing to plan is planning to fail” – Benjamin Franklin
Look into a Term Policy if affordability is an issue in the short term. Consider a Whole Life Policy which can offer protection and potential capital gains if financial budget allows.
Solution: Speak to an adviser and ensure that he/she have a proper solution towards meeting your personal needs. Ask for an Insurance Portfolio based on your lifestyle and financial needs and objectives.
Read about: Whole Life Policy: How does it work?
Read about: Term Insurance: How does it work?
Read about: Managing your Insurance Portfolio
Seek higher financial returns
If those stated above are already taken care of, seek out higher returns on your funds. Be it planning for funds in your retirement years or a lump sum of funds at certain life stages, do not underestimate the power of compounding returns.Take measured risk based on your risk profile to growth and earn capital appreciation.
Read about: Missing out on compounding returns?
Solution: Look for suitable financial product and investment according to your risk and profile. An experienced wealth planner should be working out your financial goals and objective instead of pushing you to take up a specific product. Ensure that all your financial goals and objectives are on track by reviewing your Investment Portfolio with your financial advisor periodically.
Read about: No budget for financial planning?
Read about: Managing your Investment Portfolio
Contact us should you require additional information and we will get back to you on your questions as soon as possible.