Asked by Anonymous
Asked on 05 May 2018
Ah. Spendthrift! Same problem I had.
Firstly, I believe the basics of budgeting is more important. Investing can come after that.
Came across a method that works for me really well. It is to put your money into envelopes.
1) Have different envelopes.
2) Each envelopes are meant for different spendings: savings, leisure, food
3) Every month allocate a fixed amount into each envelope and only use the money in each envelope for the specific category.
Over time, this will form a habit of budgeting and these physical "envelopes" will ultimately mature into a way of thinking.
Only start investing when you saved enough for rainy days. Which means you can go for 6 months without income before you go broke.
When you are ready, here are some investing article to help you:
1) Create a brokerage account: https://blog.seedly.sg/step-step-guide-opening-stock-trading-brokerage-cdp-account-singapore/
Well, first off congrats to coming to this realisation! First step to better finances come with mindset to change.
So, where do you start? You said it yourself that you have spendthrift habits. The first step to any improvement in personal finance is cutting down on expenses, and increasing your savings.
Conquer this first step!! Won't be easy but it will change your personal finances for the better!
I will cover the "Savings" part only in my answer.
Start with a goal and to guide your thinking, there is the GROW framework (link) for goal settings. With a clear goal in mind, you can work out the granular details as per how you could achieve your goal, especially if the goal is a financial ones...in this case, about savings.
You can tell yourself: I am making X amount of money annually (excluding bonus) and I would like to save Y amount by the end of the year. Thus, I need to save Z amount per month until year end...
And so, If you just started working, and haven't already opened an account such as OCBC 360 or DBS Multiplier, you should do so. There are two reasons for it,
Earn higher interest rate when your salary is credited there;
Use that account for your day to day expenses.
Next, open another bank account (such as the no-frill CIMB FastSaver) which you could use to build your savings,
Without failing, transfer a percentage of your monthly income to that account,
Never withdraw unless you really need to (treat it as your emergency cash and technically, please 'forget' the money is there).
The above are just tactics, which could fit in within your overall financial planning approach.