Transitioning from the student-life into employment, most of the people become financially independent. You might by now have dependants who are counting on you financially, possibly elderly parents and younger siblings who don’t have their own income.
There are student loans to repay quickly too. Although you might have landed your dream job, you could still get yourself in trouble when you aren’t adequately financially capable. It’s important to have money management skills.
Manage Your Income
Ensure you identify the disposable income (that is the portion of your salary that’s left after you’ve paid CPF and taxes, contribution or rent for the share of the household expenses), and ensure your monthly expenditure doesn’t exceed what’s left of your salary. Keep reading to find out more.
Check Your Credit Usage And Spending
It’s natural that you’d want to reward yourself for the hard work, however, keep it in perspective. When the newest must-have IT gadget or designer bag costs a huge amount of the monthly income, it could be best for you to rethink the idea of reward, particularly since these objects aren’t investments thus lose their value nearly immediately. A little self-control plus a strong desire to overindulge will only get you into trouble financially. Keep reading…..
You’ve got a credit card and have eaten at classy restaurants and clothed in the best labels. You’ve bought a car using a moneylender’s personal loan. All looked rosy, but you start to feel the pressure – the credit card bills are fully paid and promptly. You start to pay only a minimum sum, the outstanding amounts keep growing as interest accumulate and overwhelm you. You’ve taken cash advances plus borrowing from your parents, however, the amounts keep snowballing. At last, your car is repossessed and you seek help to reorganize the debts to evade bankruptcy.
Remember to spend what you can afford (but that doesn’t imply its ok to use all that you earn). Consider many aspects before you can borrow. Getting a payday loan, personal loan or credit line need to be the last resort since the costs you’ll incur and complications when you can’t honour your debt commitments.
Learn To Work With A Budget
A realistic way to manage your disposable wages and keeping track of your expenditure is to come up with a budget. An easy one could be planned in three steps:
- Catalog all your living expenses (rent and meals, transport, etc.)
- Choose the portion of your salary you wish to use on every item and strictly follow it.
- Save the remainder of your pay. Begin first with practical amounts (about $200 a month) and aspire to save about 10% of the pay. And a lot more when you can.
Remember to evaluate your budget periodically. You might find that the planned expense limits are unworkable: they might be low or high than they actually are.
Change the distinction accordingly – assign more cash to prioritized items, remove unnecessary costs and ensure you save the remainder. Although you can’t save a lot to start with, having savings is an excellent habit to build. Little amounts will grow over time through compounding.
Aim at saving 3-6 months’ worth of salary for emergencies and rainy days. Remember to also put aside some cash for infrequent expenses such as for buying birthday presents for close friends or your Mum, for example.
Encourage yourself to improve next month through remembering your financial goals. It’s not at all too early to put away some cash for retirement, for parents’ expenses after they retire when they are looking up to you; a dream holiday or a dream flat.
Are You New To Paying Taxes?
Normally, you’ll get a notification by post or SMS from Singaporean Revenue Authority (IRAS) notifying you when you are needed or not expected to file your Tax Returns.
A realistic way for you to manage your own finances is to ensure you understand what can be taxed and what isn’t, also to plan in advance to lessen the tax payable:
Normally, all salary earned or derivative from the country can be charged income tax. This will include income you’ve earned from various sources like your employment, carrying out freelance work, offering private tuition services or even babysitting services, or your online business, etc.
Starting 2-17 the Year of Assessment (YA), your personal tax returns rates will start from 0% (for a yearly chargeable salary of a total of $20,000) to 22% (for yearly chargeable wages in a surplus of $320,000). Personal tax returns rates in Singapore are progressive, that means the higher income earners will pay proportionately high taxes.
There is a personal tax rebate of about 20% of payable tax to people who are residents in the country for YA2017. The amount was capped at $500 for each individual. You could further reduce the tax payable through claiming tax deductions like your course fees relief (this is for any classes leading to academic, vocational or professional qualification, or something that is relevant to the present employment), parent relief (to help support your aging parents who don’t have an annual income above $4,000), as well as deductions on any donations, etc.
Planning In Advance
Always make an effort to apply and learn basic cash management skills. Make a financial plan indicating your goals and the actions as well as strategies to help you reach them. Discover how disciplined investing and savings will help you reach your set goals thus you be financially ready with savings. Also, have an insurance policy in situations of emergencies. You are responsible for your own financial well-being.
Several workplaces make possible for benefits which permit you to reduce your expenses. Confirm with your employer whether you will get reduced dental and medical fees. You might be covered under a group insurance scheme as well. Be sure you understand these benefits and limitations of these insurance schemes.
The benefits may not be moveable when you change employers, thus you need to consider obtaining some health insurance. In addition, consider taking life insurance (when you need financial security for your dependents) whilst you are still young.