9 Tips to
Every year when people are making their New Year’s Resolutions one of the most common ones pertains to one’s personal finances, including:
- Achieve one or more financial goals
- Save more
- Get financially organized
- Get an actionable plan in place
We’ve all been there, we’ve all said “this year will be different” and we’ve all let procrastination and our lives get in the way. We understand, it’s human nature.
Imagine this scenario:
- You have a long list of life admin tasks and errands to run
- You start to knock them out one by one, making progress
- You finish them all
That feeling, you know it right? You start to feel chipper, feel a sense of accomplishment and pride. Productivity makes you feel good, also human nature. You had a roadmap as to what you needed to do and in what order.
While that feeling of accomplishment on simple tasks is amazing, we assure you it’s even better when you take control of your finances.
1) Be Greedy, prioritize your savings plan and yourself first
In the words of Warren Buffet: “ Don’t save what’s left after spending, but spend what’s left after saving.”
A simple trick is to impose a “savings tax” on yourself. Everyone pays taxes as part of their monthly income. Now it’s your turn to be the tax man and enforce your own “savings tax” on yourself. We typically suggest that ~20% of your income should be your personal savings tax which goes into a regular savings plan, investment platform account, or other savings vehicle.
Utilize automatic contributions to give yourself the discipline to prioritize your savings and yourself first.
Watch your savings steadily grow.
2) Audit Your Expenses
You can adopt one of two ways to save more money:
- Earn more
- Spend less
Earning more isn’t easy in these uncertain times. Great for those who are but for those who haven’t, that leads to spending less. Regardless of the times, most people can easily name areas they could eliminate or scale back. By doing an audit of your expenses, ask yourself “what’s unnecessary?”
You cannot build wealth with bad spending habits.
Trim the fat.
3) Rely on Yourself
Your retirement is ultimately YOUR responsibility. In South East Asia, without any government or employer provided pension, you’re on your own to save for your future.
The ball is in your court, start scoring.
4) Mitigate your Liabilities
Like tip #3, in Asia we don’t have any safety net for medical expenses. You cannot rely on any Medicaid, Medicare, NHS or other state provided system to take care of you.
Even here, unforeseen medical bills can quickly run into the thousands. All it takes is diagnosis or even fairly routine surgery. Factor in more serious or multiple surgeries, chronic conditions and ongoing treatments can further escalate that to $35,000, $50,000 and beyond.
At worst, we recommend getting an inpatient only plan with a deductible. Even if you loathe health insurance, at least get protection for the big-ticket items and make sure you have access to the best healthcare in Asia.
Protect yourself and your savings with health insurance.
5) Set 'Why' Goals
What is your motivation for increasing your savings? Set “why” goals, and give yourself tangible and achievable savings goals. What are you saving for?
- That nice holiday you damn well know you’re going on when all this is over
- To have more financial security and flexibility
- Home purchase or deposit
- Children’s university education
- Starting a family
- Business opportunities
- General savings
- 6-months’ salary for emergency fund
- An international move
- That car you’ve always wanted
- Because you deserve it for how hard you work
- Tired of your current financial status
Just like with your to-do list or errand list, start with goals that are achievable first, then increase your goals as you grow your savings. Imagine that moment, that day, that feeling of pride and achievement. Got it? Good, now write down your whys.
Without why goals, there’s no what or how.
6) Don't try to 'Time the Market'
By trying to time the market, you have to be right twice:
- When you enter
- When you exit
Relieve the stress of investing by doing a regular savings plan with recurring monthly contributions no matter what the markets are doing. Over the long term, take advantage of dollar cost averaging. As prices go down, you actually get more units for the same price.
Sit back and relax, you have a plan, stick to it.
7) Give yourself Time
The main driving factor in the accumulation of wealth is time. The longer your money is working for you, the more you will accumulate due to compound interest.
Any delay in starting your savings journey means one of three things:
- The more contribution is later required to hit the same target
- The less money you’ll have in the same period
- The longer you need to delay your end date
Time is the healer of all wounds, the age-r of fine scotch whisky and wine and it’s what you need to give yourself to accumulate savings.
Earn while you sleep.
8) Ask your the Hard Questions
Just like your weekend errand list, you take things one step at a time. Difficult questions need to be asked and answered. Here are some:
- What’s your retirement plan?
- How will you pay for X item on your ‘Why’ goals list?
- Is your money working for you? Are you happy with your results?
- How likely are you to hit your goals if you continue to do what you’re doing now?
- What happens if you suddenly lose your job or income?
- What happens if you develop a critical illness?
There are things you can’t control in life, but need to be prepared. Having a plan to build your savings and putting away a small amount of each paycheck is something you can do.
Control what you can control.
9) Ask yourself the Hardest Question:
“Are you open-minded to:”
- Seeing if a savings plan in right for you?
- Taking control of your finances
- Getting an easily actionable plan in place?
- Growing your savings, financial security and flexibility?
Remember, with anything in life, you have to start somewhere. And we’re here to help.