What Tangerine Writing Contest by EPB website. Aim To continue the story using a given heading or where the former writer ends. I won twice in the 5-round contest.
What "Are You Ready" Contest by Central Providend Fund. Aim To share personal experiences on financial management on any of the four topics give. I wrote on "Cash Flow Management".
Some problems with their website, as you can see from my screenshots below. My name comes out as "Lum Peng" and the article displays some garbled text. To make it easier for reading, I have copied the original text further down. Hope you enjoy my piece.
Some problems with their website, as you can see from my screenshots below. My name comes out as "Lum Peng" and the article displays some garbled text. To make it easier for reading, I have copied the original text further down. Hope you enjoy my piece.
Budget + Tracking = Cash Flow Management. Simple.
The
worse that one can do financially is nothing.
I
can say this because more than 10 years ago, my husband and I were merely
talking about being more financially savvy but we ahem well, just talked, and
did nothing. The eureka moment came when I was attending a Basic Financial
Management course as part of my job training. I couldn’t help but ask myself
why I was learning how to read other people’s financial statements, and yet
failed to set up one for the most important company I keep - our own household.
I
decided to start small with a monthly expense spreadsheet. I rounded up all our
monthly expenses, dividing them into the “fixed” and “variable” categories. In
the former would be our monthly insurance premiums, allowances for parents,
home loan installments etc; and in the latter, the nice-to-haves e.g.
groceries, meals taken outside, books, personal grooming, travel etc.
The
fixed expenses were easy enough, since we used GIRO and the billed amounts were
reflected very clearly. For the variable expenses, I made it a point to
religiously record big and small expenses for a few months, just to have a good
idea of what and how much we spent on. A lot of people may balk at the idea of
recording daily but I think the very exercise itself was revealing.
This
very simple act of penning things down made me realize how much we were
spending on a rather surprising expense category: food! We were eating out for
lunches at work and on weekends too, as well as splurging on that cup of coffee
with friends at Starbucks, which really made the food bill swell. I also kept
all my receipts and that helped me recall the amounts easily. For this to work:
Remember, don’t sweat the small stuff. It’s really just to get a general idea
of which categories of expenses the money goes to on a monthly basis.
Armed
with that, I was able to come up next with our Cash Flow and Budget
spreadsheets, simply by plugging in our monthly incomes and any other sources
of income we may have then, e.g. dividends from stock investments, as well as
setting aside yearly amounts for the following categories: Fixed Expenses,
Food, Personal Grooming, Children, Transport and Entertainment/Travel.
My
husband and I decided we could aim to put aside at least 10-20% of our monthly
income into a Goose Account, named after the goose in the famous Aesop’s
Fable. “Never ever kill the goose that
lays the golden egg” – so every dollar that goes into the Goose Account can
only be used for investments and absolutely nothing else. We still keep that
Goose Account till today and I’m glad we did it because it gave us the
confidence to invest when markets were low, taking advantage of low price
conditions.
Needless
to say, some people around me were surprised at my new spending and tracking
habits. I even inspired one of my colleagues to do the same. She was still
paying off debt from her university days even though she had already begun
working for a few years. Judging from her rather spendthrift ways, I didn’t
think she would last but to my very pleasant surprise, she came up to me one
day and announced she managed to pay off all her university loans! All because
she had begun to track her expenses and become more aware of how she was
managing her cashflow! I was elated for her. If it could work for her, think of
what it could do for me!
This
simple but powerful habit has helped me in many other areas of my life. It
helped us make better decisions on whether to upgrade to a new car or stay with
a used one, remain in our HDB flat or buy a private property, and whether I
could quit my job and work part-time at home to take care of the children. For
the past 10 years, I have kept to this habit and have taken on the role of “Financial
Accountant” in our household. Till this day, I still email our monthly “Net
Worth” chart to my husband, and using that chart, we discuss our future
financial goals and investments.
And
to think – it all started because I simply wanted to know how much we were
spending!