Personal Finance Resolutions For 2018 So That You Can Invest With Peace Of Mind

I know what the cynic in you must be thinking: Resolutions are made to be broken. Yet, there is always the hope for a fresh start in a new year.

Here are a few simple personal finance rules that can help you organise your financial life, so that you can invest and grow your money with peace of mind.

1. Save

Most people do not save a lot of money. And the problem is, without savings you cannot invest. In fact, prior to investing, you should have set aside an emergency fund made up of three to six months’ worth of living expenses to handle whatever life throws at you.

2. Have a budget

The first step to managing your finances is knowing what and how much to spend on. If you are new to budgeting, or dislike the hassle of tracking every single expense, you can try the 50/30/20 rule. 50% of your income should go to living expenses, such as rent (or servicing your mortgage), groceries, utilities, and transport. 20% should go towards savings and investments. The remaining 30% can be spent on non-essential expenses such as gym memberships or holidays.

3. Avoid credit card debt

There is nothing worse than paying annual interest of over 20% on credit card debt. You should be paying off your entire credit card debt each month, and not just pay the minimum amount required. Some banks actually allow you to automate credit card payments so you will not be at risk of incurring late charges, or mistakenly falling into credit card debt.

4. Have a salary-savings account

If you do not already have one, you should! A basic savings account typically accrues interest at a rate of 0.05% per year. Many banks now offer interest rates of over 2% per year if you credit your monthly salary to a account with the bank, and also fulfil other criteria (such as paying bills through the bank, and/or using the bank’s credit cards).

5. Stop comparing!

The best way to feel bad about yourself is to compare your life with others. Trying to keep up with the Joneses who are going on fancy vacations and spending sprees will not make you feel happier. As 2017 comes to an end, why not make a resolution to always keep your focus on yourself for 2018 and beyond? How can I manage my finances better? How can I take care of my financial-self better?

Like J.K. Rowling once said, “Achievable goals are the first step to self-improvement.” By following the simple rules above, you would be taking the first but important step towards managing your money better.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.