According to the Credit Suisse Global Wealth Report of 2019, only 1% of the world’s population has over 1 million US Dollars (~ SGD 1,391,250.01). However, 10% of the world’s population, or 780 million people, live on less than $1.90 (~ SGD 2.65), the world’s poverty level. The other 89% of the people are somewhere in between – neither the richest nor poorest.
Now, no matter the category you belong to, the way you manage your personal finance is crucial. An acute awareness and masterful approach to money can improve your standard of living and status. In contrast, poor management of your personal finance can spell doom for your life ahead. The following are ways you can approach your financial decisions and optimize money management to make you perhaps one of the world’s one percent.
- Set Financial Goals: Setting a goal implies having a target in sight. Without a target, you are like a traveler on a journey without a destination in mind. By setting a SMART goal, you have formed a patterned resolution for yourself. Being SMART means to be specific, measurable, ambitious, realistic, and timely with your goal.
- Having A Budget: Budget is where you plan out your goal, breaking it up to a daily, weekly, monthly, and annual end. Budget is where you cut off useless expenses; plan your salary for the mortgage, phone bills, groceries, etc. Ultimately, the budget provides you with 100% control over your money and helps you organize your spending.
- Tracking Your Budget: While the budget helps you to track your goal, you also have to monitor your budget. It is no news that a lot of rich people employ financial managers for just this simple task. Maybe it is not so simple after all. It is hard to track your budget if you are just learning to set goals and having a corresponding budget. Tracking your budget means you are learning discipline. In other words, you are accommodating budgeting as a new lifestyle. Such discipline may include, not spending any $5 note you get your hands on and possibly just allowing yourself to spend those loose change in your pocket, etc.
- Learn to Save More: Apart from the Central Provident Fund (CPF), you must make allowance for other savings in your budget. Indeed, CPF has served as a means of savings for the good people of Singapore over the years. However, other than your CPF, you can also save a portion of the remaining money by opening a separate saving account to put away a part of the remaining money into it at the start of every month. Your personal finance often improves with more money kept in reserve.
- Keep Multiple Income Sources: You can earn extra income, even if you have a full-time job. Some of the best suggestions include making some investments or launching an online platform where you share useful information or work as a freelancer. You can also have equity investments in public and private companies. Whatever your decision, ensure you are engaged in a business that brings in extra income.
In conclusion, the path to managing your personal finance starts with a productivity mindset. That is what you will use in setting your goals. The saying, you travel fast alone, but you travel far with people, also applies to managing personal finance and mindset. You must surround yourself with financially intelligent people and resources. You can even go as far as attending financial classes or getting a financial instructor. This way, you can have someone or people keeping tabs on your economic growth.
In our upcoming article, we will be sharing with you some personal financial advice given by Evergreen Group’s BDD, Mr Desmond Sim, who has been invited as a special guest on Knowledge Academy to give a talk on personal finance management, that you could apply in your everyday life and potentially improve your financial management literacy.