Guide To Financial Planning – How you manage your finances can have a big impact on your life—and it doesn’t take much to get things in order. With a few small and simple steps, you can lay a solid foundation for your financial well-being.
The pandemic has shown that things can change dramatically without warning. Act now to increase your financial resilience and preparedness. Whatever it is, it will be a big step towards reducing anxiety and stress in our lives.
Guide To Financial Planning
The road to financial prosperity begins with living within your means and then having a plan to achieve your financial goals. That’s what budgeting is all about: planning and saving your expenses.
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Having a budget and tracking your spending will put you in control of your money, not the other way around.
To avoid spending money you don’t have, it’s better to prioritize saving over spending. That is, before allocating the rest of your money to expenses, you must first set aside money for savings.
As you continue, your expenses should decrease and your savings should increase! Not only that, but you’ll learn to differentiate between needs and wants – an important skill for managing your money!
A note about the risk of overcharges: interest on late or partial payments adds up very quickly, and missing insurance premiums or mortgage payments can have serious consequences.
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By setting aside three to six months of expenses as emergency savings, you and your family will have a breathing space if you’re hit with a financial shock like losing your job.
Of course, you don’t want to take more drastic measures like selling your home or rushing to liquidate your investments to deal with an emergency.
Set instructions for a recurring transfer where a fixed monthly amount is transferred to this account.
If you practice saving before spending, you should build up your cash reserves in no time. Remember, it’s a good idea to start as soon as possible because time is your greatest asset. With the power of compounding, small savings can grow quickly and easily over time.
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Investing is a way to grow your money to reach your financial goals faster than leaving your savings in the bank.
But all investments involve risks, and you may lose most or all of your investment. So, you should only invest money that you can afford to lose. This means that you should first set aside cash reserves for emergencies and have enough money to pay immediate needs like insurance premiums and mortgage payments.
If possible, start investing early with small and simple investments to take advantage of the power of compounding. However, be aware of fees and surcharges, which can affect your bottom line.
Fact: You don’t need a lot of money to grow your money by investing. For starters, you can buy Singapore Savings Bonds for as little as $500. More information here.
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You can deposit up to $50 into your CPF Special Account to earn risk-free interest rates of up to 5% per annum. Find out how.
A good retirement is the goal of financial planning. The sooner you start planning and establishing healthy financial habits, the better your chances of achieving the retirement lifestyle you want.
To create a financial plan that will help you fund your lifestyle after retirement, you must first determine how much you need for retirement.
Don’t ignore the effects of inflation and compound interest. It’s never too early to start financial planning for retirement.
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The bottom line is that financial planning is for everyone and the best time to start is now! Take these small positive steps today to build yourself a stronger financial future.
While you’re at it, check out our 5-minute survey that recommends ways to improve your financial health!
You can also sign up for an online workshop where Financial Literacy Institute trainers can answer your questions and guide you on your financial wellness journey. Working for yourself gives you a lot of freedom to set your schedule or choose the clients you want to work with, which means you’re solely responsible for delivering your work and managing your finances.
From tracking your pre-tax income to finding your own health insurance plan, you face unique financial challenges when you’re a freelancer. To overcome these challenges, we’ve put together 5 financial management tips for freelancers.
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This means that you must maintain complete and accurate records and books of your business transactions from the outset, and such records must be supported by invoices, receipts and other relevant documents. You should also prepare a profit and loss account statement as well as a balance sheet.
With this in mind, you should open a separate bank account to keep track of your income and business expenses in addition to your personal expenses.
A separate bank account can help prevent your business expenses from getting mixed up with your personal expenses. In this way, you can effectively monitor your business expenses, whether you are investing enough or spending too much, and you can use these expenses as deductions when you file your annual tax return.
It will also be easier to keep a close eye on your income and see if you are reaching your goals.
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When you get paid as an employee, your employer usually automatically prepares and reports your income for you to file a tax return. But as a freelancer, you’re now running your own business, and that means the burden of tracking and managing your taxes falls on you.
Just like running a business, it’s important to have a healthy cash flow and pay your taxes on time. It’s your responsibility to make sure you have enough money for your taxes, and if you overspend and don’t have enough money left over to pay your taxes, you could be in trouble with the tax laws.
That’s why it’s good practice to prepare in advance by setting aside 20% to 30% of your income for taxes. That way, you can be well prepared when it comes time to pay your taxes.
Unlike working as an employee, freelancers don’t have the usual benefits like paid sick leave and health insurance. Therefore, it is important to have adequate insurance coverage as it protects you from any unexpected financial burden in the event of an accident.
Three Step Guide To Financial Planning
An insurance you may want to consider is income replacement insurance. This insurance can protect you in the event of a serious illness, which may result in a loss of income due to the negative impact on your work performance. There are currently two insurance products for this type of coverage for freelancers: Freelancer Income Protection (FLIP) (Gigacover) and Prolonged Medical Insurance (PML) (NTUC Income).
Other insurance policies to consider include disability insurance and professional liability insurance. The former provides monthly income if you are incapacitated, and the latter provides coverage for incidents such as negligence, loss of documents, and infringement of intellectual property rights.
Before buying insurance, it is good to know your budget and needs. You can also speak to your trusted financial advisor who can advise you on the right policy for you based on your needs and budget.
As a freelancer, you have to deal with a variable income. That’s why it’s important to budget and keep track of your cash flow. It helps you manage your personal budget, business expenses, and design goals for big expenses.
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There are many different methods and strategies for tracking and managing budgets, and you can try different methods to see which one works best for you.
For freelancers, try using the popular 50/30/20 budgeting approach, where you spend 50% of your income on essentials, 30% on discretionary expenses, and the last 20% on savings or taxes. . Another approach is zero-based budgeting, where every dollar you earn is earmarked for a specific goal until your balance is zero.
In addition, you should review your budget regularly to ensure that you are meeting your goals.
As a freelancer, it’s best to have a clear idea of how much your services will cost. One way to do this is to do some research on market rates based on your own skills and experience. For those new to the world of freelancing, you can start by offering a lower rate for your services to build your portfolio, and with more time and experience, start charging more (or move away from lower rates).
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Delaying or not getting paid for work done is also every freelancer’s nightmare. As a freelancer,
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