New year’s resolutions are cliché, but one resolution is always worth making. That is taking full control of your finances. This way, you won’t be stuck in a cycle of debt like last year (or the year before if you have lots of debt). You can then confidently say, “I don’t have to keep going to a licensed money lender near me.”
Here are four effective, actionable pieces of advice that will let you take control of your financial life.
Take an inventory of all your debts
At the start of the year, sit down and go over all your debts—credit cards, personal loans, or your home loan. Ask yourself these important questions:
- How much principal do you owe on each loan?
- What are the interest rates of each loan?
- How much interest do you have to pay for each loan?
- What are the monthly repayment deadlines for each loan?
- How much time do you have left to fully repay each loan?
If you have bank loans, most Singaporean banks like UOB, DBS, and OCBC have loan tracking features in their mobile apps. Money lenders also have these, so take full advantage of them to evaluate your debt situation.
Create a workable budget
Your budget is like a map for where your money will go. Focus on the essentials—food, transport, bills—and also set aside money for savings and loan payments. Use budgeting apps on your phone to make it easier and so you don’t forget.
Also, keep this rule of thumb in mind. It’s called the 50/30/20 rule:
- First, set aside 20% of your monthly income to pay off debts and for savings.
- Use up to 50% of your monthly income for needs, like food, rent, transportation, and utilities.
- You can then use the remaining 30% for wants, like eating out, shopping, and leisure activities.
Apply this method consistently each month, and you’ll be on the right track to creating a budget that will keep you out of debt.
Consider refinancing or consolidating your loans
If you’re juggling several loans, consolidating them might help. The Singapore government can help you through the Debt Consolidation Plan (DCP). With the DCP, you can put together several unsecured loans (those loans that do not require collaterals) into one chunk.
If you’re paying off a home loan, for example, you can look into refinancing. This will make your loan more affordable to pay off with a more workable repayment plan.
Set clear, achievable financial goals
Make your financial goals specific and well-defined. For example, one goal could be to pay off $5,000 of credit card debt by June 2025. It could also be to save at least $10,000 by December 2025. Whatever your goal is, make sure to put numbers on them and set a deadline.
At the same time, build an emergency fund with enough for three to six months’ worth of your needs. With this, you can avoid being forced to take out loans because you suddenly ran out of money.
Conclusion
If you take control of your finances as the year starts, you’re setting yourself up for financial freedom. Whether it’s paying off high-interest loans, building a safety net, or simply organizing your financial life, small steps now can lead to big rewards later.
