The start of the new year is always a good time to declutter your life and get organised. Too much clutter can not only distract but given rise to stress. You can look into decluttering your home, your work and commitments, and more importantly your finances.
In the new year, I hope everyone can develop these four habits and work towards their financial goals.
Avoid impulse buying
Physical stores usually have well-planned strategies on pricing, product display, music and ambience to allure customers and increase sales. Meanwhile, online stores take on both subtle and direct tactics to boost sales. Subtle tactics include soft selling product or service reviews by KOLs on social media platforms. Direct tactics take advantage of big data to display advertisements to targeted potential customers.
To avoid impulse buying, differentiate between “needs” and “wants” and guard against all sorts of sales tactics and advertisements.
Track your expenses
Spend 5 to 10 minutes a day to record your actual daily expenses on a notebook, excel spreadsheet or IFEC’s Money Tracker app. This way you can review you budget and spending pattern to cut back on unnecessary expenses.
In addition, pay attention to online movie or music streaming services, cloud services, newspaper and magazine subscriptions. While monthly costs may appear insignificant, they can all add up over time. Remember to terminate services that you no longer need or when there are cheaper alternatives available.
Settle credit card bills in full every month
It is convenient to pay with credit cards, but avoid paying just theminimum payment amount”. The interest rate is very high and would only add burden to your finances. Given the compounding interest, your repayment amount will eventually end up being higher than your initial borrowing amount. In some cases, it may even take 10 to 20 years to pay off the debtthrough minpay. Also, overdue payments will have a negative impact on your credit score, making future credit card or personal loan applications difficult; the financial institutions may impose higher interest rates or even reject your application. So make sure you pay your bills in full every month!
Do your homework before investing
Investment is an important part of financial management. According to an IFEC survey, most retail investors tend to rely on secondary sources of information rather than conducting their own research.
Do your homework before investing by familiarising yourself with that particular sector and look at the macroeconomics. You can refer to company announcements and financial statements to track its plans and progress. In an increasingly unpredictable and speculative market environment, it is important to exercise good investment discipline.
Finally, I wish everyone a good start and much success in money management in the new year.
