Are You in Control of Your Finances?

16 December 2015
<p>Are you able to get that branded bag guilt-free after spending on essentials? </p>

Are you able to get that branded bag guilt-free after spending on essentials? 

Here are four ways to tell if you are in the pink of financial health

 

1. You can spend on non-essentials without feeling guilty.
Set aside a budget for fixed expenses (like groceries and transport) and discretionary ones (such as dining out and holidays) – and stick to it, instead of using your gut feel to gauge if you are spending within your means.

 

2. You can afford to have work-life balance by switching to a lower-paying job.
Eliminate unnecessary debts like unpaid credit card balances, because they reduce your cash flow. For obligations like a mortgage and car loan, your overall debt should be capped at five times your annual household income by the time you’re 30. This figure should drop to four times as you hit 35.

 

3. You are equipped to deal with unexpected expenses.
Save up at least six months of your monthly pay – the minimum you’ll require to deal with unforeseen expenses such as home repairs and medical treatment.

 

4. You do not dread retirement.
Do your sums now! Know exactly how much you need to retire comfortably, taking into consideration the predicted number of years you’ll live and your monthly expenditure, among other factors such as inflation and investment returns.

 

EXPERT SOURCE: Gregory Fok, certified financial planner

 

Gordon Ng, Her World Magazine, September 2015

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