A supermodel looks into the mirror and sees a lump of lard, while that guy who plays 50 hours of DOTA a week looks into the mirror and thinks, “Not bad.” If everyone had self-knowledge, the first few episodes of American Idol would not exist. Nor would there be people who think “they can handle” taking out a loan for a $100,000 wedding, or spending half their salaries each month paying for a car.
Just in case you think all is fine and dandy despite the following glaring warning signs, we’re here to tell you you’re in financial trouble.
You have no savings despite working for more than a year.
No matter how much or how little you earn, you have to have some savings, so long as you’re drawing a full-time salary. Everyone at every income level should have an emergency fund.
Whether you’re saving up to buy a house or a gold-plated Chanel bag, have student loans to pay off or are obliged to treat your family to a banquet, that’s no excuse for not having at least an emergency fund.
Saying you’ve only been working for 6 months or 1 year is a bad excuse. Ideally, you’ll start saving the minute you hit the workforce.
If your savings account gets totally drained at the end of the month even after a year in the workforce, consider yourself in big trouble.
Your credit card bills are not fully paid off
If you believe everything you see on TV, it’s easy to succumb to the notion that credit cards are a ticket to shopping sprees. Take your plastic to Orchard Road and you come back looking like Carrie Bradshaw or one of the guys on Suits.
Yet nobody ever talks about how important it is to pay your credit card bills on time—and not just the minimum sum, but the full amount.
Each time you pay off anything less than the full amount, you get charged interest—and it’s interest that only loansharks can rival. You’re probably going to paying over 25% per annum.
And because each month you get charged interest not only on the amount you initially owed but also on the interest of all the previous months, the numbers on your bill can escalate alarmingly—even if you’re paying the minimum sum each month!
You have to borrow money for consumer needs
Most Singaporeans have to take out loans for many of the big purchases in their lives—homes, cars, renovations, even university studies.
But if you find yourself having to borrow money for your shopping or daily needs, you’re in very bad financial shape.
If you’re not paying off your credit card bills in full or turning to moneylenders, banks, your boss or even friends and relatives at the end of the month in order to upkeep your daily life, you really need to come up with a sustainable budget and stick to it.
It might sound surprising, but many perfectly respectable looking professionals and couples in Singapore have unsecured debt. If you’re one of them, you can save yourself, but you’ve got to start now.
You have no medical insurance
Singapore is not a country where people can afford not to have private medical insurance. Despite the changes to the MediShield / MediShield Life system, it’s still not smart to rely entirely on it.
The level of insurance you get from MediShield Life is very, very basic, and payouts can be, for lack of a more appropriate word, pathetic. You’re stuck seeking treatment in public hospitals, and you only get enough payouts to cover Class B2/C wards, the most lowly type available. The types of treatments that are covered are also limited.
So long as you have some sort of income, you should try your best to get a private medical insurance plan as soon as possible. A single medical misadventure can ruin you financially.
Use MoneySmart’s health insurance wizard to compare plans if you have no idea where to look.
What other warning signs are there that you’re in bad financial shape? Tell us in the comments!