When it comes to personal finance, there are ways to make every dollar count. Here are the things I did right (and wrong) this year.
As the year winds down to a close, I always like to sit back and take stock of all that has happened. What went well for me? What were the biggest highlights, the triumphs, the moments to be savoured? Conversely, what didn’t go so well for me? And what could I have done better, or chose differently, to have a different outcome?
When it comes to personal finance, doing the right things is tangibly rewarding - you’ll save money which you can put towards savings or other goals. On the other hand, making mistakes with money can exact a cost that is painful to think about, much less suffer.
In that spirit, I’d like to share with you 3 things I did right this year in terms of personal finance, as well as 3 money mistakes I made.
What I Did Right #1: Getting Medical Insurance for My Wife and Child
The birth of my daughter Radha is one of the most significant moments of my life, and I’m sure I’ll always treasure the memory.
I’d like to think that one of the wisest financial decisions I made was to get sufficient medical insurance for both my wife and baby, right from Day 1.
By paying a smaller amount in insurance premiums, I have saved many times more in hospital and doctor fees which a pregnancy can throw your way. Hospital visits, doctor check-ups for both mother and child, right up to all the immunisations to keep my daughter healthy, our insurance plans took care of all that.
The result? We freed up our household budget to take care of other baby essentials.
What I Did Right #2: Using a Balance Transfer to Save S$1,000
In order to save 10% off my life insurance policy, I opted to pay the premium on an annual basis. I used my credit card for this payment, and although I have saved money on my life plan, I now had a huge credit card bill to pay.
As you know, credit cards carry high-interest rates. Whatever savings I had made on my premiums would be eaten up by the credit card interest charges, putting me in a worse financial position.
To prevent that from happening, I got a balance transfer which had a 6-month interest-free repayment period. I managed to pay off the entire credit card bill within this period, so I did not have to pay interest.
The Balance Transfer cost me S$200 in processing fees, but I had saved S$1,200 on my life insurance plan. All told, my total savings was S$1,000.
What I Did Right #3: Using a Cashback Card to Save S$1,000 on Groceries
My wife and I split up the household’s financial responsibilities between us, which leads to many beneficial situations.
To help manage our finances, we set a monthly budget for grocery shopping, which we pay for using a credit card that gives us monthly cashback. My wife monitors and ensures we stick to this budget, while I watch the credit card cashback cap.
Try making use of a cashback card for your regular expenses to accumulate savings throughout the year. The OCBC 365 Credit Card gives you cash rebates across a wide variety of daily expenditures, including 3% cashback on grocery shopping. With this, you can earn up to S$80 cashback per month.
What I Did Wrong #1: Wasting S$1,000 on Hotel Breakfast Buffets When Travelling
Like many Singaporeans, we love to travel. When booking hotel rooms for the family, I often opted for rooms that had a buffet breakfast included. These rooms cost slightly more, but I figured it would be worth it.
When we decided to visit the local market in Spain early one morning, we realised what a mistake it was to book the hotel breakfast buffet. Just steps away, the market had more delicious and cheaper breakfast options to offer.
Choosing to go out for a local breakfast could have saved us S$50 per day, or S$1,000 over 20 days of travel. Also, witnessing the hustle and bustle of an unfamiliar city as it went about starting its day was way more enjoyable than sitting in the hotel restaurant.
What I Did Wrong #2: Delaying Replacing My Emergency Fund
I had to use my emergency fund to cover my mum’s medical expenses. It was a good thing I had the fund saved up in the first place; I could pay for the procedure without adding credit card debt.
My mum is ok now, after the procedure (thank the heavens!) but my emergency fund was now depleted. I should have made a plan there and then to replace the fund within the next 3 months, but I did not.
Building an emergency fund is an important component of a sound personal finance strategy. Since I have not replaced my fund, I’m putting it high on my to-do list in 2017.
What I Did Wrong #3: Wasting Over S$2,000 on the Wrong Mobile Plans
While reviewing our household expenses, I realised that we had signed up for the wrong phone plans. We were on the highest tier plans available from our provider, but our data usage was nowhere near what was provided in the plans.
In other words, we were wasting money every month on mobile data that we did not use. To make matters worse, our contracts have us locked in until 2018, and downgrading our plans would incur heavy penalty fees.
This was a huge, huge financial mistake that could have been easily avoided if we had been more careful. If we had opted for the lowest-tier plan instead, we could have saved over S$2,000.
Small Things Make a Big Impact
As I look back on my year, one thing that struck me was how it was the small things that made all the difference.
Not researching our holiday destinations for breakfast options bumped up our travel expenses, as did not checking our mobile phone usage beforehand. But keeping track of our monthly cashback helped us save on groceries, while using a balance transfer helped me avoid expensive credit card interest charges.
And that’s the beauty of personal finance. Making small changes can result in huge differences, sometimes of up to thousands of dollars.
What 3 small changes can you make to improve your finances in 2017?
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By Rohith Murthy
Rohith leads Singapore’s SingSaver.com.sg, a financial comparison site aimed at helping consumers in Singapore save money and time by finding the right financial products.
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