“Awak Kat Mana” Financial Bearings In Singapore…

Sun, Mar 8, 2015

Insurance, Investment, Miscellaneous

Latest, hot and spicy news!!!  1st Singapore Idol winner, Taufik Batisah is getting married!!! 🙂

I was humming, Singapore Idol’s Taufik Batisah, latest song, “Awak kat mana”
which means “Where are you?” in Malay….

The song is so catchy and the dance moves are so slick, cool and contemporary…. Nevertheless, sometimes, it can be annoying, when people keep repeating, “Awak kat mana? Awak kat mana? Awak kat mana?” :p

And as a financial consultant, everytime I hear this song, it reminds me to ask myself,

Where Am I FINANCIALLY?” 🙂
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I used a few financial indicators and ratios to determine my financial bearings.

After doing my cashflow statement and my networth statement, I used these financial ratios to determine, if I am financially okay or not. I encourage you to use it too.
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1) Basic Liquidity Ratio

Basic Liquidity Ratio indicates your ability to meet your monthly expenses and other emergency needs.

Basic Liquidity Ratio= Cash/monthly expenses

Like a Malay proverb which says, “Sediakan payung sebelum hujan”, which literally means ‘Prepare your umbrella before it rains”.

umbrella

In my own words, you need to prepare some liquid cash in your bank, that you can take out anytime you need, without any hassle.

As a rule of thumb, if you are an employee, I encourage you to have at least 6 months of your monthly expenses in your bank, ready for use during emergency.

If you are self employed, where your income can fluctuate up and down, have at least 12 months of your monthly expenses in your bank.
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2) Liquid Assets to Net Worth Ratio

Liquid Assets To Net Worth Ratio calculates the amount of net worth you have in terms of cash.

This is important because in an emergency situation, it may not be easy to convert your assets into cash, without any hassle.

toilet

You wont caught up in a situation, as my mum always say, “nak terberak, baru nak siapkan jamban” which literally means “wanna shit, then you want to dig a hole.”

Therefore, it is necessary to maintain some assets in cash.

Liquid Assets to Net Worth = Cash / Net Worth

I recommend you to have at least 15% cash in proportion to your networth.

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3) Debt Service Ratio

(measure the proportion of ‘take home’ income, net of CPF contributions, used to make regular repayments of debt)

Debt Service Ratio = Total monthly debt repayments / Monthly take home income

I recommend you to have a debt service ratio of 35% and below. It means you have enough take home pay to service your monthly debt repayment.

Anything above than that is unhealthy and will put a financial strain in your life.

slave

You will not want to live life, waking up every morning, only to work and slog hard like a slave just to earn enough to pay your debt. Have some financial buffer and live life comfortably! 🙂

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4) Savings Ratio

(calculates the proportion of income the one sets aside as savings for the future)

Savings Ratio = Savings / Gross Income

money
Personally for me, if you are still single, don’t have much financial commitments, I highly recommend you to save as much money as possible. The higher your savings ratio, the better it is!!! 🙂

If you are married, have kids, and aged parents to support, target to save at least 20% of your gross income.

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5) Change In Income Ratio

((This Year Income – Last Year Income)/ Last Year Income) X 100

As you know, I am self employed and I make money by earning commissions when I provide my clients with financial planning advice. I have an excel spreadsheet where I monitor my commissions earned every month, cumulatively every year.

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I expect my change in income ratio to increase steadily by at least 20%/year. This is imperatively important to me and also my clients, because they know, that my financial planning practice does well, and I can stay in the business for long, to service them, as long as they live! Alhamdulillah, my production improved by 32% last year and for the first time in my career, I become the top 85 financial consultants in my insurance cooperative in the whole of Singapore. 🙂

If you are self employed or running your own business, I encourage you to calculate your own Change In Income Ratio too! 🙂

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and by the way, if you are still wondering, what’s the Taufik Batisah’s song that I have been talking about earlier, tune in below! Enjoy! 🙂

 

p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…

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This post was written by:

- who has written 416 posts on The Official Helmi Hakim Website.

A certified financial consultant, Helmi Hakim has won praise for his patience, perseverance and practicality when solving his clients' financial concerns. For more information on how you can manage your finances better, contact Helmi Hakim at 96520134.

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