Note: It was announced in November 2023 that MoneyOwl will be acquired by Temasek Trust to serve communities under a re-purposed model, and will move away from direct sale of financial products. The article is retained with original information relevant as at the date of the article only, and any mention of products or promotions is retained for reference purposes only.
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New year, new you! Up your financial wellness with these easy-to-implement financial resolutions.
For many of us, the start of a new year is a time of introspection and reflection. We start to think back on the past year and what we could have done better and make plans for improvement in the year ahead.
When it comes to financial resolutions, perhaps you wish you could have saved more or spent less, or maybe you are still dragging your feet about that long-overdue insurance review. Whatever the case is, don’t worry – we have your back.
The best way to achieve any goal or resolution is to stick to the SMART rule. So, when mapping out your financial resolutions for 2022, always make sure that they are Specific, Measurable, Actionable, Realistic and Time-Bound.
For example, instead of saying “I want to retire early”, the SMART approach would be “I want to have $____ in passive income, as well as savings and retirement worth $____ by the time I am _____ years old.”
Makes sense?
Now, let’s dive into five resolutions you can take with you into the new year and hopefully start your journey towards greater financial well-being!
You have probably heard of the classic 50/30/20 budgeting rule where you divvy your income and allocate 50 percent to needs, 30 percent to wants and 20 percent to savings. However, every person has a different set of life circumstances, and this proportion may change according to your life stage. So while there is flexibility to make minor adjustments to your budget, always make sure you have at least 3 to 6 months of living expenses socked away as emergency savings.
We have said it before and we will say it again – “Always pay yourself first.” Before paying your bills and spending on expenses, channel a portion of your income towards savings. Although this figure can vary depending on your financial goals, it is a good idea to save at least 10 percent to 15 percent of your monthly income – excluding your CPF contributions. Your savings don’t have to be restricted to your monthly salary either. You can make additional top-ups throughout the year, such as when you receive your performance bonus or Annual Wage Supplement (AWS).
To help your money grow its value, don’t leave it idle in a bank savings account where it will earn minimal interest. Consider putting your cash reserves in a savings fund such as MoneyOwl WiseSaver, which allows you to earn higher returns than regular savings account while still offering you liquidity. If you already have your emergency fund sorted, you can consider channelling your extra money towards investments (more below).
Before you start investing, it’s essential to sit down with a financial adviser to go through your insurance portfolio. This is especially crucial if you have recently gone through or are about to go through a significant life milestone, for example, getting married, buying a house or having a child. Ensuring you have proper coverage is vital as it gives you peace of mind that your financial goals will not be derailed in the unfortunate event of an accident or health crisis.
Many of us avoid meeting our insurance agents because we are afraid of being hard-sold products or plans that we are not sure about. If that sounds like you, consider reaching out to a MoneyOwl adviser instead. All of MoneyOwl’s client advisers are fully salaried and do not earn a commission, which means you can rest easy knowing that their advice has your best interests at heart. MoneyOwl’s advisers are also fully qualified to offer advice on national schemes such as CPF and how they factor into your financial plan.
As mentioned above, one great way to make your money work harder for you is through investments. According to the recent UOB Asean Consumer Sentiment Study released in November 2021, 38 percent of respondents in Singapore have put more money into investments in the past six months. This is an 8 percent jump from the previous year.
And why not? With the rise of online investment platforms and the wealth of information available on the world wide web, investing has never been easier or more accessible. However, with so many options out there, you will also need to be discerning about which type of investment is best suited for your needs and risk appetite.
MoneyOwl’s recommendation is to invest in globally diversified funds – made up of a range of equities across various geographical markets. This enables you to capture the returns of the winners whenever and wherever they appear while preventing you from being overexposed to a particular country, sector or company, which helps mitigate overall risk.
In short, don’t put all your eggs in one basket.
Because of how quickly things change in the financial landscape (crypto, anyone?), it’s important to stay abreast of trends and policy changes by researching. That way, you will be able to identify gaps in your financial plan better and advocate for your needs if necessary.
Everybody has a different approach to learning, so whether you prefer reading a book, watching a video or listening to a podcast, make it a point to keep on top of personal finance news at least once a month. In addition, MoneyOwl runs regular webinars, with topics running the gamut from insurance, investments and financial planning, so be sure to follow them on Facebook for all the latest event updates.
