Forget resolutions, these tips are sure-win ways to help you save money in 2016.
Going into 2016, many of you will be embarking on a new phase of life. You have your resolutions to start your year anew, but have you got your finances ready?
Here are money-related items to settle before 2016 starts:
1. Evaluate Your Insurance Portfolio
This would be a good time to call up your insurance agent, to do an annual review of your policies. Here a few things to consider when reviewing your insurance portfolio
1) Adequate coverage – Do you have enough coverage for yourself and your dependents? This could include medical, critical illness and even whole life. Consider upgrading your integrated shield plans to get almost complete coverage in the event of a hospitalization.
2) New financial goals – Do your policies work hard enough for you? Review the funds that your investment-linked polices are pegged to. Also look at how your endowment policies are doing and if you are on track for your financial goals.
3) Change of payment mode – Do you have a credit card that could give you a rebate (cashback) on your policies, or even allow you to accumulate points based on the premium payments?
Some credit cards only give rewards for retail spend, but some do include these types of payments. Check around on SingSaver.com.sg to find the best credit card for savings. Also consider switching your payment mode from monthly to annual payments as you typically save 10% off your annual premium payments.
2. Compare Home Loans
Home loan rates change frequently, and a lot of it is down to the banks’ quotas. As the bank nears its lending quota, the rates will rise. If a bank is still far from lending as much as it wants to, the rates will be low. This means a bank that has the best home loan rates this month may well have the highest rates next month. You have no way around this except to check the rates constantly.
Review your current home loan every three to four years, and compare them with what the banks are offering now. Note that, in most cases, home loan interest rates will spike sharply on the fourth year. You can refinance (switch to a loan package from another bank) to keep interest rates low.
For 2016, the trend is to find a fixed interest rate, as home loan rates have been at historical lows for almost a decade. They are quite probably about to rise as a whole, given the recovery of the American economy (this impacts bank interest rates in Singapore.)
At the time of writing, UOB has one of the cheapest home loan packages at just 1.68% interest per annum.
3. Create an Emergency Fund
If the first two points already burden you, it is all the more important for you to ensure your emergency fund is well established. The ballpark figure is between three to six months of your income.
This would be the minimum to tide you through a job change, while still maintaining your current lifestyle. One way to make it easy to establish your emergency fund is to set up a regular savings account, that automatically deducts a fixed amount every month when your salary comes in.
After hitting that milestone, the next step would be to grow your emergency fund to be equivalent to your last drawn annual salary. Not only will this give you a greater piece of mind, but a portion of those proceeds could act as a mini “war chest” for more aggressive, high risk investments, such as starting your own side business or even trading equities.
4. Check Your Automated Payments
Your 2015 resolution might have been filled with goals to be healthier and leaner. Hopefully you succeeded. But even if it didn’t work out and you just spent all day in front of an Xbox, your monthly subscriptions to your gym still cost you a lot of money.
Watch out for automated billing. These are recurring payment systems that the service provider has put in place for your convenience, but more for their bottom line. Despite not attending a single session of that yoga membership for the past six months, it would still be on your tab. So take the time to look through your credit card statement and weed out the subscriptions that you have not been using.
5. Get Rid of Unwanted Credit Cards
Most credit cards would have a core benefit, from extra air miles to rebates on your grocery shopping. Evaluate which ones match your lifestyle changes and demands, while removing those that you don’t need. Not only are you saving on annual fees, you would also have a card that racks up rewards faster. There’s minimal benefit in using a petrol card for dining out.
Knowing how many credit cards are out there, comparing them can be a hassle. SingSaver.com.sg’s comparison tools allow you to compare credit cards based on airmiles, dining privileges and even rebates.
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By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.