Learning Resources

5 Money Management Tips You Should Remember

22 Nov 2021

5 Money Management Tips | Money Money Home Episode 1

How much do you need to save to live "happily ever after"?

It's no secret that many people struggle with personal finance. In fact, according to the latest statistics, about six in ten Singaporeans admit that personal money management is an extremely difficult thing for them, some having no savings whatsoever.

And this is even after government bodies and financial education institutes CONSISTENTLY shared tips for money management countrywide.

That's a scary statistic for a developed nation like ours.

Moreover, the last two years had been difficult for many. People lost their jobs. Their businesses went bankrupt. Their life savings evaporated. And many people are realising they may have to work longer than they planned just to survive.

When asked why they weren't prepared beforehand, most can only say "I never thought this would happen." The wake-up call only came after the pandemic happened, and it was already too late by then.

Unfortunately, money management skill is often overlooked by many, simply because it is not emphasised in our education system.

And then, there’s also the notion that the income/salaries will keep coming throughout our lives when that is actually far from the truth. Accidents happen. So do retrenchments, illnesses, and sometimes, family-related circumstances.

That's why, to help you better prepare and to make sure you'll never stumble financially again in the next financial crisis (trust us, there WILL be another), we've gathered some tips for money management that have been proven to survive generations of financial crises.

1. Savings come first, not after

Money Management Tips | Savings First | Money Money Home

Many people fail to budget for savings and often overspend because they don't include savings in their monthly expenses planning. If you do this, you are setting yourself up for failure.

You should only spend AFTER you have allocated your savings and necessary expenses. If you don't do this, you will be tempted to spend money on things you don't need. And this will almost certainly lead to an unhappy ending.

Think about it. After toiling away for many years at your job, who else deserves your salary more than YOU?  

2. Prepare an umbrella

Money Management Tips | Prepare for Rainy Days | Money Money Home

Saving for a rainy day is an important thing to do. The sooner you start to save, the more you will have when the rainy days come. And when they do, you’ll be glad you did.

Having enough money to get through bad times is one of the best financial mindsets you can develop. No matter what happens in the economy, if you always have enough funds to tide you over, you'll be a lot more resilient to the ups and downs of life.

Generally, you should always have three to six months' worth of expenses in cash, savings, or some other liquid assets. This amount varies depending on your unique situation, but, just remember that you should always have enough to get by for a few months if necessary.  

3. Don't put your well-being at risk

Money Management Tips | Health is Wealth | Money Money Home

As kids, some of us were already provided tips for money management by our parents, e.g., saving or working to earn our pocket money, which is great. But what we weren’t taught was the value of own well-being versus money.

Yes, saving is good, but what SHOULD you save on and what SHOULDN’T you hold back spending on?

For example, it is important that you spend on nutritious food, life insurance, and books as they contribute to your longevity and personal growth. Designer brands, on the other hand, while they are good to have if you have money to spare, don't need to be at the top of your list of monthly expenses.

There are so many stories in the news about people who are unwell later in life because of poor financial decisions they made when they were young. As they say, don't be penny-wise but pound-foolish.  

4. Beware of inflation

Money Management Tips | Beware of Inflation | Money Money Home

It may surprise you to learn how few people actually track the rate of inflation. Most people aren't even aware that their money will lose its value. This is a big mistake.

The truth is, inflation is like a silent thief that creeps into your bank account each year and steals a little of your money. When you stop tracking the rate of inflation, you are allowing this thief to win.

An easy way to tackle this is to invest the extra money you have after saving for your emergency funds – even if you only have a few hundred dollars. Or make sure your savings are rewarded with interest. In the long run, you'll be surprised how well you hold up against inflation versus others who do nothing about it.  

5. Make sure someone is watching you

Money Management Tips | Seek Help | Money Money Home

Left to your own devices, you will, sooner or later, lack the motivation to do what you've set out to do. It is almost impossible for a person to be self-motivated the whole time without any catalyst or motivating factor. This includes sticking to your expense planning.

Most people who sign up for money-making endeavours do not accomplish very much, no matter how skilled they may be. And it is easy to get off track when you are working on your own, no matter how many great tips for money management you have.

On the other hand, having someone to hold you accountable, give you feedback, and provide moral support – all of this will help you achieve your goals.  

Not managing your money is like getting on a roller coaster without any seat belt on. And life cannot work that way. Things will go wrong. In fact, financially speaking, nothing really ever goes right.

So, it is important to have a financial road map, and with this, you’ll get the freedom to spend your time on the things that matter most (your relationships, your business, and creating more wealth).

And speaking of relationships, catch the shenanigans between married couple, Jia Daren and Zhen Xianren, in our first episode of Money Money Home, as they navigate their finances as a couple through second-hand hairdryers, exercise equipment, and lottery numbers.

Money Money Home is an edutainment series that takes reference from Malaysia’s TV programme of the same title.

Savings don't make you rich but not having any savings will definitely make you poor.

Do you have more money management questions you're looking for answers to? Join our free online masterclass on creating passive income for families and for more tips for money management.

DISCLAIMER

No income guarantee or promises of any type are being made in this article. Know that your results will vary due to circumstances that are outside of our control. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.