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5 Tips To Help You Reduce Your Financial Burden

Lynette Tan
Updated

This article was originally on GET.com at: 5 Tips To Help You Reduce Your Financial Burden.

Growing up in Singapore comes with its own set of financial responsibilities - paying rent, giving money to our parents, saving for a house and paying for insurance are some of them.

Dealing with money is a huge part of life, and it makes sense to learn how to manage it well so that it does not adversely affect other aspects of your life.

With some nifty tips and small changes, you can reduce your financial commitments to make managing money a smoother process for you.

We at GET.com will show you 5 ways to reduce your financial burden:

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1. Keep A Minimum Liability

What's a financial liability? A financial liability is an obligation (or debt) that does not grow in value. A very simple illustration of this concept is the idea of comparing a property and a car.

A property is most often considered an asset even though you need to pay a huge sum for it. Why? Because it is deemed to grow in future value.

A car, however, takes on depreciation over the years. This means that it's hard to make money off of it at the end of the day.

This is why cars are considered a liability. If you are able to keep your liabilities low – reducing debts, loans and instalments – you will have more cash for saving and investing, which in turn can help you grow your wealth.

2. Buy Insurance

Healthcare costs are not cheap in Singapore, and even though we have financial aid from our Medishield accounts, we cannot rely on it to cover all of our medical bills.

Thus, it is of utmost importance to take out some sort of health insurance to reduce the potential financial liability from poor health. It's best to start early in life when insurance policies are usually cheaper.

3. Make Use Of Your Credit Card Wisely

A credit card doesn't have to be seen as a seductive mistress tempting you into giving in to your desires. You can use it wisely, and if you do, it can help you save money (and even earn money).

If you use certain cashback cards, you can benefit from discounts on your purchases, cashback earnings, and 0% instalment plans for large purchases.

The latter is especially useful if you are paying for a big-ticket item that requires the cost to be spread out to make it more affordable for you. Do make sure you are able to pay the full instalment each month so that you are not charged any extra fees.

For example, if you use HSBC Visa Platinum Credit Card you can take advantage of HSBC's cash instalment plan which offers a 0% interest rate for two different tenures (12 and 18 months). During this time you can pay off your purchase on a monthly basis without incurring any interest!

4. Share The Load With Your Partner

If you are married, your spouse should be your ally in managing money. Having another person to provide opinions and options is a great way to make better financial decisions.

If you are looking to buy a private condominium, ask yourselves if both your incomes can work to support it. If you are planning on having children, you should also have a talk about what your budget for spending on your kids will be – are you going to be extravagant with your child or will you teach your child frugality with the lifestyle you lead?

5. Use Your CPF Wisely

Our CPF can be used for supporting 3 main financial commitments – retirement, medical fees and property purchases. While the money may be sitting there passively, make use of it wisely to build up a nest egg.

For instance, if you are using your CPF to finance your home loan, you may want to review it every few years to see if refinancing makes better economical sense.

Also look at topping up the CPF accounts of your loved ones to enhance their CPF savings and enjoy tax reliefs as well. If you are not using your CPF for a home loan, you can also look to transfer the funds from the Ordinary Account to the Special Account to enjoy higher interests.

Lynette Tan is a contributing writer at GET.com, a personal finance and lifestyle website. Email: lynette.tan@get.com

This article was originally on GET.com at: 5 Tips To Help You Reduce Your Financial Burden.

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