Most of us actually “semi-adults” already have a job. We might be working at an MNC, SME, or even at our individual start-ups and the government of course. Whether you like it or not, some part of these jobs scope is going to involve us in some kind of managing our finance. What has been done in this article is the identification of some finance management skills which one might have learnt already at their place of work, and to know how one can apply the skills for their individual finance management.
In the course of prudence, every organization, among them non-profit entities, carry out some kind of budgeting. Actually, budgeting can be performed at a department level & consolidated later. If necessary, the recommended department budget can be reviewed if the expenditures have been deemed so high. Among the main reasons as to why budgeting is crucial is ensuring that the cash flow of the company remains to be healthy & it doesn’t spend a lot of money as compared to its generations. Spent cash must come from somewhere & in case the money has not yet been earned, it is then going to be borrowed from a licensed money lender in Singapore, at a certain interest.
In a similar manner, you are required to do budgeting for your family & yourself too. In case you are an employee and you receive a salary, this should be easy since you already know what your income per month is going to be. An easy budgeting exercise should make sure that you don’t fall into the pitfalls of careless spending past your means. Always remember to allocate money for savings & investing once you have done your own budgeting exercise.
2. Diversify your revenue streams
Have you had a look at a profit & loss statement of any listed entity? In case you have done so, you might have realized something which most of the listed entities share in common, but which most of the ordinary Singaporeans lack.
Most listed entities commonly have many sources of revenue. That is due to the fact that companies frequently have more than a single source of revenue.
Most companies will have a main business that generates the largest of the company’s revenue. They might then have an extra business that compliments the main one, which further generates extra revenue. Most of the times, these business aren’t linked.
For instance in the year 2013, Singapore Press Holdings did generate a revenue of around $1 billion from their main business of magazine & newspaper. The company went ahead to generate around $200 million from their business of property development.
As individuals, it’s good to note that we can also strive to get extra income apart from our daily jobs. These extra incomes must not always be connected to our daily job. For instance an engineer may invest in a blue chip, which is a dividend-paying stock. In case you are a civil servant, you can decide to base your investment into properties. For the case of a self-employed entrepreneur, they may decide to contribute to their CPF accounts.
3. Spending on the assets
After deciding that you would prefer to “diversify your stream of revenue,” the following step should be taking a closer check at your “personal balance sheet” & compare it to the balance sheets of listed entities. The listed entities’ balance sheets are normally filled with “useful assets” like cash, investment property, patents & even equipment. These are the assets which enable a company to generate revenue. These are essentially “needs” of that company. At an individual level, some “needs” incorporate the buying of some affordable home, expenses on food, utilities & transport. The “needs” are important in helping us to generate revenue. Without these needs, we cannot be able to attend to our daily jobs.
Doing some investment on stocks, commodities, properties and bonds might similarly be considered as “needs” since they form a holistic plan for retirement. The financial instruments bode well in the category of assets in the “personal balance sheet.” Extra intangible assets are your degree certificate. Sometimes, we are required to chalk up some liability in order to fund these “useful assets.” Acquiring a home mortgage or even an education loan can be some examples.
What is not fitting in the category of assets in a “personal balance sheet” are items like an awesome birthday bash which you just organized or an expensive honeymoon trip. As you argue that a matrimonial bed worth $5000 & an Italian leather sofa worth $4000 that you purchased deserve to be included in the category of “asset”, you should know that it’s not a “useful asset.”
4. Maximize your tax breaks
Large companies hire consultants who assist them in completely maximizing the available tax breaks. They just spend cash, to save extra cash.
As individuals, we might not require a consultant who can assist us manage our tax returns. However using some self-education about tax related issues, we can potentially handle it ourselves and save significant cash at long last.
Never underestimate the amount of cash that you can be able to save through simply by doing an easy task to acquire some knowledge. In case you are the kind of person who has spent hours to argue with their credit card operator about waiving the late fee charges, you are required to consider spending some time reading up & keeping updated on personal tax issues in Singapore.
5. Prioritize spending
Anyone that runs some business is going tell you that there are so many things they needed to purchase. This might range from crucial items like new equipment for replacing an old one, important but not-that-critical items like new office computers, good-to-acquire items for instance a better meeting room or some luxury items like a good pantry.
Something which is critical for a certain company might not be for another necessarily, & vice versa. For instance, an advertising agency can rank the need of a freshly remodeled meeting room much higher up on their list of priority as compared to a company which has been in the manufacturing industry.
In a similar manner, you should categorize your spending according to your order of need. For some families, spending many dollars to educate their children is just a must-have. Others might prioritize the need of having a car, regardless of its cost, because of the need of transporting their special needs children.