From avoiding ‘buy now pay later’ schemes to religiously going through your monthly credit card bills, here are 12 financial resolutions to make so you can start 2022 off on the right foot.
I don’t know about you, but I’m feeling twenty twenty two. If this rendition of Taylor Swift’s hit song 22 has been constantly replaying in your head just like it has in mine, then maybe it’s time to take action and make 2022 your year instead of leaving things up to fate.
While we’re unsure if this will be the year where we eradicate COVID-19 and make limited social interactions a thing of the past, we can make the most out of the new year nonetheless by creating some resolutions to keep our finances in check.
Regardless of whether your cashflow has been in the red for the whole of 2021 or if you merely want to save more money, here are a few financial resolutions for the new year to help safeguard your wallet (and make your financial advisor proud).
1. Track your expenses
While it may be a lot easier to have an overview of your total monthly expenses by just checking your credit card statement at the end of each month, you won’t know exactly how much you’re spending on different categories. This is where an expense tracker app will come in handy.
Most expense trackers allow you to input your date of spending as well as the exact category you’re spending on, be it food, public transport or personal care. They even have specific categories like ‘date night’, ‘phone bill’ and ‘pets’ to let you track every single cent and look at the areas that you can cut down on. This helps you carve out budgets for each spending category, instead of looking at your spendings as a lump sum. It’s tedious, but life-changing!
2. Compile a master list for your spendings
You might be wondering why you have to take the extra step of tracking your spending on a master list when you already have an app. Well, an app can help you take note of your expenses for each month, while a master list can give you an overview of your expenses as a whole, allowing you to make comparisons and draw patterns by the month.
On your master list, you can also group your expenses according to specific categories to complement your expenses tracking app, while also including fixed and automated expenses like insurance premiums and loan repayments.
Feel free to use any format that works best for you, as there are many available templates that you can easily download off the web. It’s also a good idea to include your CPF funds, outstanding loans that you might have and a quick overview of your investment portfolio to have a consolidated financial sheet you can easily refer to.
3. Avoid ‘buy now pay later’ schemes
With the proliferation of ‘buy now pay later’ (BNPL) apps that have revolutionised online payments, you may realise that you tend to overspend on big purchases, especially since you don’t feel the pinch immediately. Most of these schemes allow you to pay in interest-free instalments, making the monthly payments a lot less painful on the wallet.
But what you don’t realise is that even though the price may seem a lot more affordable when it is being split up, you’re still paying the same full price of that luxury bag or branded wallet. So if you want to save money, it’s high time to avoid these BNPL schemes so you don’t trick your brain into thinking that the item you’re purchasing is much more affordable.
4. Review your subscriptions every half a year
At some point in your life, you’ve probably signed up for a subscription on impulse because it was cheap and only used it for the first month before completely forgetting about it. Though these subscriptions are usually quite affordable when you break them down into monthly payments, these subscriptions can chalk up to a significant figure over time.
It’s a good practice to set aside a date every half a year to review your subscriptions to see if they are worth paying for. Have a gym membership to a gym that you only visit once a month? Terminate it. How about that Disney+ subscription that you barely have time to make use of? Cancel it.
5. Create a separate savings account
There’s been a longstanding debate over whether it’s better to have a separate savings account or to combine your savings and spending account. While each strategy has its fair share of pros and cons, you might be more inclined to separate your savings if you have a chronic spending issue.
Out of sight, out of mind. If you do not see that five-digit figure in your bank account, there’s a smaller chance of you spending beyond your means. Make it a personal rule to not touch your savings unless there’s an emergency, and you might just find yourself cutting down on your spending. Having a bank account just for spending also allows you to keep to a budget.
6. Avoid linking your credit card to your phone
Not sure about you, but there were many times where I gave up on a purchase because I was too lazy to fish my wallet out of my bag and pay with my debit or credit card. Now that my card is linked to my phone, buying things has never been easier.
If you really want to curb your spending on unnecessary items like that snack from Don Don Donki or that bubble tea you’re craving for, you can unlink your card from your phone so that taking out your wallet from your bag becomes a literal chore. This helps you to do a double-take and consider if you truly need or want that item.
While it may seem like an added inconvenience, especially when you’re taking public transport, these small habits can go a long way in cutting down your expenses.
7. Sleep on your big purchases
When it comes to big-ticket purchases, most people wouldn’t think twice before spending a bomb on it. And more often than not, these purchases would soon prove to be impulse buys over time. If you practice sleeping on your big purchases, you might make wiser decisions when you give yourself time to decide if the item is worth purchasing.
Give yourself about three days to a month to ponder over the item. If you find yourself still thinking about it after that, then buy it. This would help you to cut down on impulse purchases that you might regret later on.
8. Review your insurance plans frequently
Whether you’re your own financial advisor or you have one who can professionally manage your insurance portfolio, carve out some time to review your plans. Similar to subscriptions, go over all your plans and their coverages to ensure that the plan is still able to meet your needs.
Maybe you require more coverage now, and switching over to another policy would be cheaper if done immediately rather than dragged out over the next couple of years. Or maybe there’s a specific policy that you felt was important back then, but may now be a little irrelevant given your financial situation. Keeping track of your insurance policies frequently helps you manage your finances by only paying for the plans that you really need.
9. Switch out to a cheaper electricity operator
Given the launch of the Open Electricity Market (OEM) in 2018, many electricity retailers have since entered the market and are offering attractive electricity prices.
If you’re one of those who haven’t given much thought to shopping around for cheaper prices and have just been sticking to the original Singapore Power, maybe it’s time to make the switch. Though electricity bills are one of those things that you just pay without giving it much thought, you’ll be amazed at how much you can save if you switch to a cheaper retailer. Some retailers even have ongoing promotions and deals to give you the most bang for your buck.
10. Solidify your emergency funds
If you don’t have enough savings for a rainy day, let 2022 be the year that you build up a solid emergency fund. A rule of thumb is to have at least six months’ worth of income at any given moment.
Whether you’ll need to lay off investing for a while or cut down on shopping, set aside a few months to solely focus on savings before you make your big purchases or get back to dollar-cost averaging.
11. Go through your credit card bills
Though it might be painful to review your exorbitant credit card statements each month (especially when you didn’t keep track of your spending), it’s a good practice to look through your credit card bills to check for any fraudulent transactions.
On top of that, check if you’ve been double charged for something or if you’ve been paying for an ongoing subscription that you have completely forgotten about or have already opted to cancel.
A tip for you is to call your bank to ask if you can have your credit card annual fee waived, as some banks would gladly do it for you as long as you’ve been spending consistently on that card. Instead of giving in and paying annually, there’s really no harm trying!
12. Cut down on takeaway food
Gone are the days where your average chicken rice cost about S$2.50. In this day and age, even finding a decent plate of chicken rice at S$3 can prove to be a challenge. Takeaway food can be extremely expensive - and worse, more unhealthy - when you compare it to home-cooked food.
The best solution? Opt for home-cooked food instead. Spend a little more time hitting the supermarket to stock up on ingredients. Even if you’re slowly transitioning back to the office, prepping most of your meals can go a long way in helping you save money.
If 2022 is all about budgeting and ensuring that your finances are in check, we urge you to start penning down your financial resolutions for 2022... and keep to them!
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