Ways to Stop living from Paycheck to Paycheck

Living a life of surviving from Paycheck to Paycheck? Here's Tips on How to Stop this life...

1. Draft up Finance Portion !

Don't know where your entire paycheck go every end of month? Start drafting up your finance portion now! Losing track of where your hard-earned money is spent on? This is how your finance portion will assist you.

With the finance portion drafted out, it helps to make full use of your paycheck and ensure that every dollar and cent is accounted for.

Otto will update you the tips on how you can evenly portion out your Expenses, Short Term Savings/Investment, Long-Term Savings/Investment and Wealth Protection:

Here's How You can Allocate your Paycheck wisely.

The majority tends to follow the 50/20/30 rule. However, it is slightly different if you are someone who tends to be a spender.

Instead of assigning 50% to the portion of your expenses, 40% will be a more ideal choice. This is to ensure efficiency in building your emergency funds.

With the 10% of expenses minimized, it can be used to set up your emergency funds.

*For accuracy,remember to deduct 20% from your paycheck amount due to CPF contribution.  

Here's an example (How Finance Portion Works !)

Etc. Salary: $2,500/mth

After 20% CPF Contribution: $2,000/mth

With the $2,000 calculated, you can start to calculate what is the different finance portion for your Expenses, Short Term Savings/Investment, Long Term Savings/Investment, and Wealth Protection.

1) Expense, 40% : $800/mth

Etc. Food, Transportation, Bills …

* It will definitely be great if you spend lesser on your expenses and place the excess to your other finance portion.

2) Short Term Savings/Investment, 30% : $600/mth

Etc. Savings, Emergency Funds, Short Time-Horizon Investment...

* Short Term Savings/Investment is used to plan for more immediate future. It is important to have savings that provides you with liquidity though the interest can be minimal. This will provide for your unplanned finances be it emergency/non emergency. 

3) Long Term Savings/Investment, 15% : $300/mth

Etc. Endowments, Long Time-Horizon Investment, CPF investment...

* Long Term Savings/Investment are about looking at the bigger picture, in terms of your retirement and children's education planning. Think more about it, what will make your life better financially besides planning ahead ?

4) Wealth Protection, 15% : $300/mth

Etc. Accidental/Medical Coverage, Insurance...

* In life, unforeseen tragedies such as death, total permanent disability, critical illness or even injury can leave you and your family in tremendous emotional and financial breakdown. With an insurance coverage in place, the financial breakdown will minimized.

2. Track your expenses

Apart from drafting up your finance portion, it is important to keep track of your expenses too. However, it is tough to begin tracking your expenses. There is a saying: It takes 21 days to create a Habit and 90 days to form a Lifestyle.

*Note down all your recurring expenses so that you do not need to constantly track down.

Otto will share with you what are some of the methods to track your expenses:

Here's How you can track your Daily Expenses !

Every dollar and cent counts so do not try to round down/up if possible! Do your expenses on a daily basis, try to make it a habit to upload/write down your expenses immediately. Else the higher the chances of you to forget/lose track of the specific expenses.

3. Set Up 2 Bank Accounts

Afraid to overspend? Another method to make sure that you work towards the finance portion amount allocated, set up 2 Bank Accounts. Each of these account will serve their purpose differently.

Otto will bring you through how these Bank Accounts should be used wisely:

With your wages transferred to Account #1, it can also be used as your expenses account too. Bear in mind to transfer aT least the recommended Short Term Savings (30%) into Account #2. The transferred amount will be used for your savings and emergency funds.

Make sure the money in Account #2 is at least 3-6 months of your monthly salary before doing up your Short-Term Investment. Try to avoid using the money in Account #2 unless necessary!

4. Check Your Balance

It is important to check your balance after 3-6 months to ensure that you are on track and constantly working to the financial goal you set. This will prevent to live from paycheck to paycheck...

Remember, don't get excited if you begin to see figures increasing! Continue keep up the good work and do not overspend your paycheck.

* Share this post with your family, friends, colleagues, or any loved ones who has been overspending monthly too! Little actions helps alot! 

5. Contact An Advisor

If discipline have always been an issue for you, don't hesitate anymore!

Hit the 'Get in touch' button and drop us an email or message for help/ advice to stop you from living paycheck to paycheck.