Wake me up, when Septemb…. OH COME ON, it’s almost 2016 already?! Well, if you haven’t got around to having an SG50 baby, I have bad news for you. It’s been quite a year, hasn’t it? And you know what’s defined the year for me? Change.
In particular, FIFA’s finally getting rid of their President Sepp Blatter, who’s been in power since 1998. Canada’s gotten rid of their former Prime Minister Stephen Harper, who’s been in power since 2006. And Singapore? We voted Punggol East back to PAP. That’s what I call change. But what about us as individuals? What changes have we made in our lives this year, especially when it comes to money?
Aiyah… the year’s almost over. What possible difference can any changes I make now have?
Well, unlike New Year’s resolutions, just taking stock of your finances can actually have far-reaching consequences that go way beyond just the remaining weeks of this year. Here are 5 relatively straightforward steps you can take to improve your financial situation immediately.
1. Review your insurance policies
Most of you should be covered by some form of health insurance or life insurance that you were “encouraged” to buy by your cousin, schoolmate, army buddy or former colleague who is now a financial advisor. But just how many of you really know what you’ve been paying annual premiums for? A quick review of your current insurance policies might go a long way into helping you decide if you have too much insurance or not quite enough.
Imagine a situation where your basic health insurance policy is sufficient for your needs, but you are also paying more for a rider. Some riders are really good, and give you higher coverage, and saves you from paying deductibles or co-insurance. Then there are riders that just leave you scratching your head.
For example, there’s a rider out there that provides you with a daily cash benefit for every day you’re in hospital, as well as an extra cash benefit when you’re discharged. It’s like they’re paying you to remain in hospital! And if you’re paying deductibles and co-insurance, you’ll want to be discharged as soon as possible. What’s the worst part? This rider is costing you almost as much as a better one. A review of your insurance policies would be able to reveal that there are better options you could be paying for, or you could just save more money by cancelling the rider.
2. Do a credit card audit
We know Singaporeans love their credit cards and that most of us have at least 2 to 3 credit cards to take full advantage of all the various dining, shopping and travel promotions that come with each card. The question to ask is – do you even know what promotions come with the cards you have?
Take stock of all the credit cards you have under your name. Spend a few moments researching what the benefits of each card are. You may find that you have cards that actually compete with one another, and after you compare your credit cards, one usually has the better promotions.
For example, you may be holding onto two cashback credit cards, both of which may seem very good on their own. But with rising minimum spends, it’s getting harder and harder to meet the requirements for both cards. It may be a good idea to focus on your spending on one card, and make sure you meet the minimum spend requirement for it. As for the other card, hold on to it, just in case the rates get better (like the Citibank Dividend Card did this year). That said, you may also choose to cancel it as soon as they charge you an annual fee that you cannot waive.
3. Automate your finances
How many times have you incurred late charges on your utility bills, telco bills, or credit card bills? I can understand if it’s due to cashflow problems, but most of the time it’s simply because we have the money on hand, but we’ve forgotten to pay it till after the fact.
Sure, most of the time you can call in to request for a waiver, but do it two or three times in a year and it’ll be harder and harder to convince the organisations you owe that it’s just you being forgetful. When it comes to credit cards, this is especially dangerous, as making too many late payments could get you flagged as a potential risk. A poor credit score could take at least a year to recover from.
All this could be avoided simply by automating your finances. Set up standing instructions, using GIRO for example, with your bank to ensure that your bills are paid regularly and on time. You can even earn some rewards points or cashback rebates if you get your bills charged to your credit card. Just make sure that your credit card bills are paid on time and in full, of course.
Just one thing to note: GIRO payments take time. You’ll usually need to have the money available in your bank account at least 3-4 working days in advance before the payment date.
4. Set aside part of your salary for investments
They say “time is money”. That’s because it’s true. The earlier you start investing, the more you’re going to have later on in life. It may seem like common sense to you, but you’ll be surprise how many Singaporeans wish they started saving earlier.
2015 was a great year for newbie investors. Not only were the lot sizes for the SGX made smaller but we also saw the Chinese stock market crash making lots of previously expensive shares suddenly affordable. While the market is still recovering, there’s no better time to start investing.
5. Refinance your home loan
If you are paying off a home loan that’s pegged to the SIBOR, you probably left a large stain on your chair as soon as you saw news that the SIBOR was rising this year. Fortunately, it hasn’t skyrocketed yet, due to the US federal interest rate remaining low, but you’re pretty much sitting on a ticking time bomb.
If you’re no longer locked into your home loan, now might be a good time to refinance. 2015 saw the introduction of alternative home loan packages that weren’t pegged to the SIBOR. Refinancing your home loan could actually save you a significant amount of money.
If you would like to know how much you can potentially save by refinancing your home loan, give our mortgage specialist a call! It’s free and it may actually be the easiest change you can make.
What other changes in your financial life should you be making before the year is over? Share your thoughts with us.