I am very sad, that in the mark of the technical crisis in Singapore, many people are facing dire financial difficulties.
While the rich are facing ENORMOUS financial opportunities.
Some people whom I dont know, out of a sudden, get my hp number and asked if can borrow money. gheeidontlikethiskindofpopularity
Old friends whom I have not contacted for over 10 years,suddenly try to befriend and get close to me in hope for some bucks to spare.
Well, ladies and gentlemen, if you are reading my blog, please, i beg you please LISTEN to me.
(Real life picture taken in Singapore, YES IN SINGAPORE! I try to cover the unit no)
You have to learn to manage your finance well.
The responsibility is on YOU.
If you do not know how, get a ahlong FINANCIAL PLANNER like us to help you out.
We can help you to MANAGE your money, not we GIVE you money.
In the wake of these incidences, I have come out with 6 Rules Of Thumb that I always advise my client to follow, when it comes to MANAGING THEIR MONEY.
1) Save at least 10% of your monthly income
This is a good start to SAVINGS.
Usually, I will analyze whether my client do have a habit of savings or not by asking simple questions like,
“For these past few months, how much savings have you done CONSISTENTLY, i mean, you put your money in there, and you never take out?“.
“For the next 12 months, do you need to use that money,that you have saved?”
If they do not have this habit of savings, 10% is definitely a GOOD START.
…………………………………………………………………………….
2) Life Insurance Cover Must Be At Least 10 Times Your Annual Income
People get insurance mainly because of 2 main reasons
-Income replacement
Should critical illness like heart attack, cancer, were to occur, or you were downed by permanent disability, you will lose your source of income.
BUT, your expenses continue. The proceeds from your insurance policies helps to pay off your expenses.
-Assets Protection
Should death were to occur, all your mortgages will be paid for from your insurance proceeds.
……………………………………………
3) Have 3 to 6 Months of Estimated Expenses In Your Emergency Funds
If you are an employee, in the event of retrenchment, it will take you about 3-6 months for you to find a new job.
If you are an employer,a business owner, and your business winds up, it will take you longer, perhaps 6 months to look for new projects or find a job.
In this climate of uncertainty, I will strongly recommend you to have at least 6 months to 1 year of emergency funds.
…………………………………………………………………
4) For your retirement income, you need 70 -80% of your last drawn salary
This goes by the assumption that your expenses, will be lower when you retire.
In financial planning, we called this younoneedtospendsomuch replacement ratio method.
We assume major expenses like mortgage and work related have been settled by then.
However, this rule is not applicable to everyone.
You need to account for holiday expenses, and perhaps SHOPPING freely because you have more time when you retire.
I always tell my client, “The more you have for your retirement, the better!“
……………………………………………………………….
5) The percentage of your portfolio to be invested in equity should be 100 minus your age
In this time of uncertainty, it is BEST to stay invested.
Some people asked me, “How much money should I put into equities, and how much bonds?”
This is a simple formula to follow.
Example, a 30 year old guy.
As a rule of thumb, take 100- 30.
So 70% of his savings should be placed in equities and 30% in bonds.
Of course, this is just a simplified way of analysing the client.A detailed check will ensued.
……………………………………………………………………
6) Your home loan repayments should not exceed 33% of your monthly income
When you earn $6000 a month, it is okay to spend $2000 on mortgage.
But when you income grows,you upgrade to a more expensive or bigger house, most of your income will go to the house which do not generate income (Personal Use Assets) and less into investments and savings.
The lesser, the loan repayment per month the better.
You should avoid a situation where half of your monthly income, goes out to pay loan.
Like that, jialatla you cannot afford to be sick…. sure die….
…………………………………………………………………..
Wokei….. So now, you can gauge yourself whether you conform to this simple 6 rules of thumb in managing you money.
However, I need to make an exclusion here.
I believe 20% of you may have a lifestyle that is different from the norm.
Rest, follow these thumb rule and call me at 96520134 should you be imbued in more queries.
Financial Planning is the way to go! 🙂
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…
This post was written by:
Hey, excellent tips for finance recovery. We are facing finance crisis in our country and spending money wisely is the biggest aim.