Set Up Yourself for Financial Success

I pick the 10 points below from the article of the same title in Success from Home Magazine (pg 13, Volume 8, Issue 5, May 2012). The text in blue are personal notes I added for myself in context of where I am residing i.e. Singapore. Note: This is a disclaimer. My financial education is limited. So the notes i made here are personal opinion and should not be taken as a financial advise. Should you need financial advice or guidance please contact an appropriate professional.

10 Best Practices to make the most out of your money

Spend less than you earn. This one, simple practice will save you a world of trouble. Following a money-management system like JAR would be good. This system covers every aspect of money management. In this system, a defined percentage of the monthly pay cheque is allocated for savings, necessities like bills and more. If that’s a hassle, follow this simple practice. Upon receiving the pay cheque every month, save at least 10% and then spend the rest.
Use your banks’ auto-pay system. Setting your recurring bills on autopay helps ensure you’ll never miss a payment. Bill settlement via auto-pay like Giro is a time and money saver. No hassle of waiting in the queue and no risk of getting late payment penalty. However, check the statements just to be sure. Pay recurring utility bill payment using credit cards that gives reward points if such facility exist.
Limit others’ access to your money. Beyond creating strong passwords, make sure you maintain control by sending payments rather than allowing others to draft your account. Check the monthly deductions in banks statements.
Read the fine print. Don’t sign any financial documents until you understand exactly what you’re agreeing to. You should not rush or be rushed to sign on the dotted line. Ask for clarification or look for alternative sources of information. Google is your best friend.
Keep college loans under control Don’t spend more on higher education than you’ll earn in the first year. This can be considered a good debt as higher qualification usually equate to a higher earning potential but as the original advise, limit it. In JAR System, 10% is to be spend on courses. This could be set as the limit if the college loan is on a monthly repayment,
Protect yourself and your family Cover the basics with life, health, home, and auto insurance. Insurance is a way to protect our property and income. It mitigate the risk of illness, accidents and mishaps. Sufficient coverage is necessary. For medical insurance, sign up when you are young while you have a clean bill of health. Policy premiums may increase with age. So future planning on affordability is required.
Pay your debt It really doesn’t matter if it’s good or bad debt. Simplify life by getting rid of any debt that is hanging over your head. Credit card bill and unsecured loan is an example of bad debt that must be settled. No doubt about that. I have read an book that suggest the opposite for good debt. A home loan is a good debt. Its value will most likely appreciate over time. So instead of hurrying to settle the housing loan, take a longer settlement period. The monthly installment will then be lower and use the extra cash to invest. The argument is there is a potential of returns when the money is invested wisely.
Educate yourself Protect against scams by arming yourself with information from multiple, independent sources. This could be done by reading and attending seminars. When it comes to investment decisions, it requires careful risk assessment and knowledge instead of relying on hearsay and recommendation.
Practice giving Sharing your wealth with others fosters an attitude of abundance that permeates your entire life. This is mentioned in a books that I’ve read. Give and you shall receive. You first have to give what you want more of. So if a person wants more money, donate. In JAR system, 5% of the income that goes into the Give Jar is meant for this purpose.
Pay yourself first Every time you earn money, set aside a predetermined percentage for both long- and short-term savings. This is mentioned earlier. Be disciplined and do it right after receiving the pay cheque. In JAR system, 10% is allocated to FFA and LTSS Jar each. FFA Jar is your ticket to financial freedom. It is only for investments while LTSS is savings for big ticket items that you desire like that 15 Nights Alaska Vacation, for example.