Spending for Yesterday

This is my spending for yesterday:

Breakfast = $2.90
Groceries = $3.40
Lunch (skipped)
Dinner = $150
Household items = $250

Realised that I have been spending quite a bit on food.

Spending for Today

I read a book about real estate investing and it suggested keeping a budget for one month so that one is aware where all your money is going to.  I don't really live by a budget and I will like to think that I spend my money quite carefully.  But having tracked my daily expenditure for this month, I am quite surprised at what I have discovered.  Will probably share a little of my findings when I am comfortable.

Anyway, here is today's spending:

Breakfast (at home) = Nil
Coffee = $2.20
Lunch = $54.00
Dessert+Coffee = $10
Present/Gift = $23
Dinner (at home) = Nil

Spending for Today

Let's take a look at my spending today.

Breakfast = $3.20
Lunch = $4.75
Coffee = $1.50
Dinner (at Home)
Dessert + Tea = $11.60

Total spending for the day is slightly over $20.  Of course, I did not include transportation costs.  But a quick look suggests that all my expenditure went into food.

Are You Ready to Manage Your Cashflow?

Well, the IMSavvy site has recently launched an "Are You Ready" activity/movement/campaign.  And I was really glad that such a topic was actually chosen as it is a timely reminder for people to make sure that they are READY in terms of their personal finance.  It basically covers the 4 topics of:

•                      Managing Your Cash Flow

•                      Buying A House Within Your Means

•                      Taking Charge of Your Healthcare Costs

•                      Securing Your Retirement

Just thought that I would share some thoughts about my own personal experience regarding the first topic of managing my cashflow.  Based on the checklist provided at the IMSavvy site (http://www.cpf.gov.sg/imsavvy/ayr_list.asp?catid=1), there were a few questions and I hope to answer these questions as honestly as I can.  So here I go:

I Spend Less Than What I Earn Monthly

Yes, I do spend less than what I earn monthly most of the time.  The only times that I ever spent more than I earn was when I was either going on a holiday or spending on my wedding preparations/home renovations.  Otherwise, as a whole, I would like to think that for a typical month, I make a pretty conscious effort to spend less than what I earn monthly.  This discipline I guess was instilled in me since young - you never want to spend your pocket money before the week is over.  So likewise, when you are working, your monthly cash outflows should not exceed your monthly cash inflows unless for very good reasons (e.g. once-off big ticket items).

I Save At Least 10% of My Income

Generally, I would like to think that this is a YES for me too.  It really depends what is the definition of saving.  My definition of saving is basically income that is not spent on consumption.  So saving to me includes putting money in the bank, putting it in a regular savings plan or investing in stocks.  Well, some people will include their CPF contributions as part of their savings (and that isn't entirely wrong).  So different people probably have very different ideas about what actually constitutes savings.  For me, I do save >10% of my income over and above my CPF contributions.

Again, I must qualify that there are some months when I am a little less disciplined and splurge a little.  But with a regular savings plan that I have set up through an ILP bought years ago, more than 10% of my income does go into saving (at least based on my own definition).

I Have At Least 6 Months Worth of My Income as Emergency Funds

A big YES to this question too!  This was really something that I put off in the past and it was advice that I did not heed which I regret.  During then, I was young and rash.  I decided that the bank was paying me too little interest and decided to invest the majority of my money in stocks.  I had less than 6 months worth of my income in emergency funds even though I originally had set aside that sum of money.  Then came the time when I had to pay for some big ticket items and I was left with little choice but to liquidate some of my investments at a loss.  So if this is not good enough warning for you, please do set aside 6 months of your income as emergency funds first before you even start investing.  The last thing you want to do is to be liquidating your investments at a loss when a certain crisis (e.g. job loss) hits you.

I Pay My Credit Card Bills and Other Debt Obligations, in Full and On Time Each Month

Generally yes.  All my debt obligations are paid through GIRO so I do not lapse on it.  I do pay my credit card bills in full at the end of each month though not always on time.  This is simply because I forget to pay them or miss the due date as the credit card bill was lost in my stack of letters.  I usually call up the bank to waive the late charges since it is basically an oversight. I must have done that more than 5 times but they have always been more than willing to waive it.

I Have Adequate Financial Protection

Well, this is perhaps the toughest question to answer.  And my answer to this is probably a "MAYBE".  I know that I ought to be insured to certain levels (e.g. 10 times my annual pay for death coverage).  But all these are really rule of thumb calculations.  My protection level is slightly below those levels.  I would like to think that I am adequately insured with coverage for death, TPD, critical illness, hospitalisation and personal accident.

This is perhaps a good time for me to dust off the dust on my insurance plans and see whether it is time to review the insurance coverage for myself as well as my family members.

So how did you fare in answering these questions?  Any action you need to take if you have answered a "No" to any of the questions above?  Are you ready to manage your cashflow?

How Much To Get Married (Part 2) - HDB Flat

A few days back, I wrote about the cost of getting married in Singapore. In that post, I gave a brief outline on the items that a typical Chinese couple in Singapore would spend on. One of the big ticket items I identified was one's housing.

For most couples who have just started working and are probably not earning a lot (or born with a silver spoon), they will most probably opt to buy a HDB flat. This is perhaps the cheapest option unless you are willing to rent or stay with parents/in-laws.

When to rent

Some couples might opt to rent a flat or a room instead of buying their own HDB flat. This is usually due to cost considerations or because one is able to get a flat of choice. Others might simply want to be debt free and so choose to rent instead of buy. As a guide, one's mortgage loans (plus other debt payments) should not exceed 35% of the couple's combined salary. Most couples who have been working for 1-2 years should be below the $8000 combined income ceiling and should be eligible for a HDB flat.

In my personal opinion, it does not make sense to rent a HDB flat for long term since the HDB owner will most probably rent it out at a rate much higher than his or her own monthly mortgage payments. For e.g. if my monthly mortgage payment for my HDB flat is $1000, I will definitely rent it out at above $1000. This is common sense and so renting a flat is most probably a short term plan for most couples since it will be more cost efficient to pay the lower mortgage payments compared to the more expensive rent.

Buy A Flat

Buying a HDB flat is most probably cheap if you have money in your CPF. If both couples have been working and have build up sufficient amounts in their CPF-OA, they most probably will have enough to pay the deposit for the flat. Occasionally, some might have to top up the amounts with cash as they might not have sufficient amount of money in their CPF-OA.

In other instances, when buying a resale flat, the owner might ask for cash over valuation. Understand that this ranges quite a bit depending on flat type and location. But as a guide, I don't think that one should be overspending in this area. For me, $20K will be the maximum cash over valuation that I will be willing to pay now. This is because the HDB has just announced that it will be building a huge supply of flats. This flats will be ready probably in 2012 onwards. Based on that, one can expect the prices to come down a bit so if you can afford to wait, do wait. But for me personally, $20K is the maximum cash over valuation that I will be willing to pay.

What do the rest think? Is $20K a reasonable sum to budget for cash over valuation? Or is it too much/little?

How Much To Get Married

A common topic amongst my single friends is the amount of money that they require to get married. Many of them lament that it will cost them a bomb to get married. Big ticket items include paying for the house (cash over valuation), renovation, holding a wedding lunch/dinner @ a hotel, buying the engagement ring and of course other miscellaneous expenses. Some of them reckon that they need as much as $50k and above to get married in Singapore!

Surely there must be a cheaper way to get married in Singapore and still enjoy the perks of all the above. Let's do a rough breakdown of the expenses and perhaps in my next few posts, I can touch on how one might save up on each of the big ticket items.

As mentioned above, the big ticket items are as follows and estimated costs are also shown:

1. Buying a HDB flat (Cash over valuation) = $20-$50k (Rest is usually paid by CPF)
2. Renovation = $20 to $40K
3. Wedding dinner/lunch = $20k to $30k (depends on hotel and no. of tables)
4. Engagement ring = $1k to $10k (depends on the depth of the guy's wallet)
5. Photography + Wedding gown/suit = $1k to $5k
6. Miscellaneous lunches, hongbaos = $1k to $2k
7. Honeymoon = $500 to $10k (depending on where and when you travel)

Anything else to add to the list?

Weekend in Monochrome

Do we see the world in black and white, then paint the colours in?

5 Secrets For Sustainable Spending

Spending sustainably comes down to living within one's means. Living beyond this may mean a lower standard of living in the future, as debts need to be serviced. Some sacrifices initially may actually mean a higher level of spending can be sustained in the future. This is much more preferable to being at risk of debt collection

Make a Budget

Old habits die hard, so it's worth fostering good habits early on. This starts with making a budget. One should set aside sufficient funds to handle standard expenses, like rent or mortgage repayments, credit card payments, car repayments, car running costs, council rates, electricity, water, other utilities and the like. Additional funds should be allocated for unexpected expenses like car repairs.

Hopefully there are still some funds left over. The remainder should be split between current discretionary spending and future savings for a rainy day. One needs to enjoy life and spending for enjoyment is part of this, but it needs to be kept in check. As long as one can consistently allocate even a small amount of funds to be saved, then one is on the right track.

Investments

Allocating savings into an investment fund is a good way to save for the future. Long term stock market returns of around 10% per annum are well above average deposit rates, and well above the inflation rate. Consistently adding savings to such a fund is a positive way to build up a nest egg. What has this got to do with spending you may ask? As your investments start to perform, the investor bears fruit in the form of managed fund distributions or dividends, and capital growth.

Spending From Surplus

These dividends, distributions, or profits taken on an investment can be allocated to spending. The difference to standard spending is that one is spending from a surplus. The investment can be left to continue to grow and provide further distributions in the same way that a tree continues to bear fruit. Re-investing distributions should mean even greater distributions (and hence even greater spending capacity) in the future. Continuing to regularly allocate savings to such investments will also enhance this capacity.

Save First, Spend Later

The strategy above admittedly does require a little sacrifice at the outset. One needs to curtail immediate spending for the benefit of future spending. The alternative of going into debt is a poor option. If consumer spending is financed by debt, then this debt acts as a restricter on future spending.

Credit can indeed boost spending, but this does have a limit. The more one spends on credit, the more future income one is then forced to apportion to paying off debt. Importantly, getting into the habit of spending more than one earns can make breaking this habit very difficult.

Purchase Outright

For all but the most expensive items (like a property!), one should really be able to save up funds to purchase them. It may be tempting to go out and buy the latest Plasma TV on credit, but waiting and saving will mean no interest payments, and the TV will also probably be cheaper by that time!

No one wants to have to negotiate debt repayments with debt recovery companies. Keep control of your finances by following the above steps to sustainable spending. Stick to a budget, and allocate some funds to savings and investments, so that future spending is worry free and enjoyable.

[This is a guest post]

What I Consume In A Day

Our consumption habits are really interesting to track. Afterall, don't you find it interesting to know what of planet earth's resources you have consumed for the day?

So let's look at what I have consumed today and the companies that are involved in bringing these products to me:

7.30AM - Throat itchy, ate 1 x lozenges bought from Guardian
8.30AM - Bought breakfast comprising duck kway teow and teh si ping (iced milk tea)
9.00AM - Used the internet (Starhub Cable)
10.05AM - Received phone call from home (SingTel Fixed line)
11.00AM - Received phone call on mobile phone (StarHub)
11.15 AM - Checked email (Hotmail)
11.45AM - Worked on webpage using Dreamweaver Trial version (Adobe)
1.13PM - Ate lunch (Char Siew Rice)
2.00PM - Popped another 1 x lozenges
3.00 PM - Took a hot shower (PUB provided water and electricity)
4.00PM - Drank a packet of Pokka White Chrysanthemum Tea
5.30PM - Watched Television (Starhub Cable)
6.00PM - Ate dinner downstairs
8.00PM - Switched on the Airconditioner (PUB again?)

I know the above list makes for a boring read =)

But hopefully it enlightens you to know what are the things you consume and what are the companies involved in bringing that product to you.

How Would You Spend $100?

A few days back, I wrote a posting on 1001 Frugal Things To Do

It seems like a lot of people have many crazy and wicked ideas on how to save money. I particularly liked La Papilion's suggestion on going to Macs to store up on chilli and ketchup.

Anyway, I thought today was a good day to write about spending instead of saving.

Many people are adverse to the word SAVING.

The reason for that could be that they do not know what they are saving for or they just do not like their spending power to be limited.

That is why you do not get people who follow their monthly budgets. We all have budgets but we most probably can't stick to one (okay, perhaps those who go to Macs for chilli and ketchup top-ups are able to do so)

So let's turn the game around. Instead of asking you to stick to a budget...let's say that I am giving you $100 today and demand that you spend EVERY single cent, what would you spend it on?

This is basically what a budget is about. If your monthly budget for spending money is $3000, and saving the remainder(that is after excluding all your fixed expenses like mortgage loans and car loans), go and work out a daily budget for yourself and figure out how you are going to spend every single cent of that budget that you have given yourself.

Here is how I might spend that $100

1. $20 on a bottle of wine

2. $15 on a book to read

3. $40 for a nice dinner for two

4. $25 for some home accessories to make my home more homely and beautiful

Doesn't this way of thinking make budgeting much more fun? How would you spend yours?

The Price of Coffee

I realised that there is a vast difference in the price of a cup of coffee in various shops.

In a normal hawker centre coffee shop, a cup of coffee will cost you around $0.70
In a fast food restaurant, a cup of coffee will cost you around $2.00
In Starbucks, a cup of coffee will cost you easily $5.00

Matter of fact is that the coffee actually tastes almost the same to me. I certainly cannot tell the difference between a Starbucks coffee and one that is served in Macdonalds if you put me through a blind test.

What is amazing is that it does not mean drinking at Starbucks will make me a happier person. In fact, it is possible to drink a cheap cup of coffee and still derive the same amount of satisfaction and happiness.

It is thus possible for a person to spend a lot less and still be happy. Better to be eating bread and living a peaceful life than to have a buffet spread everyday but be unhappy.

Just my thought for the day.

The author had a cup of coffee at a fast food restaurant that cost him $2.10 today. He feels that the coffee was only average and did not particularly enjoy the coffee session anyway.

Read Related Articles:
1. Another Day at Starbucks
2. Why People Buy the Stuff They Buy

Where Did My Money Go Today?

Today, I tracked my spending for the entire family:
The total spending was $42.90

Meals Cost the Most

70% of the money spent today went into food. A breakdown as shown below

Breakfast (takeaway)= $2.70
Lunch (takeaway)= $8.00
Dinner at Ikea = $17.00
Snacks at Ikea = $2.00

Miscellaneous Items

30% of the money went into buying miscellaneous stuff and carparking

A Stool from Ikea = $9.90
Carparking at Ikea = $3.30


Read Related Articles:
1. Why People Buy the Stuff They Buy
2. Top 10 Money Saving Tips
3. Save Electricity, Save Money
4. Retire Young, Retire Rich
5. 3 Key Lessons from Rich Dad Poor Dad

Why People Buy the Stuff They Buy

Choice Overload

I was walking along one of those huge supermarkets today when I made a few interesting observations.

There were a few elderly lady that were simply staring at 1001 different types of can food displayed on the ceiling high shelves.

All of them seemed to be deep in thought and had no idea which to buy. I was standing there and wondering what was going through their heads. What would make them choose one product over another?

Logic Versus Emotions : The Psychology of Buying

Can you remember what was the last item that you bought recently? Was it today? Good!

Now think about the thought processes that went through your head as you made the decision to buy that item.

I believe that certain factors compels us to buy something. However, I believe that LOGIC has nothing to do with it. When it comes to buying stuff, people are totally not logical. Even the most logical person that you know of will become illogical when it comes to spending his money.

I made another interesting observation:

Ever noticed that a 1.5 L bottle of softdrink is sold at say $1.40 while a 0.5L bottle is sold at $1.10 . One just has to pay 30cents more to get 3 times the amount of soft drink.

However, you will most probably find people choosing the 0.5L bottle as it is simply more convenient to carry around. This is especially so if they are not heading home straight and they're just looking for something to quench their thirst.

In the above example, we can clearly see that people buy things based on a host of factors and not based on price and value for money alone. It is what I would term the "psychology of buying".

It is my view that when it comes to buying, people often buy based on emotions and not on logic.
I hope to expand further on this post at some later date.

Read Related Articles:

1. Top 10 Money Saving Tips
2. Save Electricity, Save Money
3. Retire Young, Retire Rich
4. 3 Key Lessons from Rich Dad Poor Dad

Top Ten Money Saving Tips For Financial Freedom

Here are my 10 Money Saving Tips for one to gain financial freedom. Saving money is part and parcel of the process towards financial freedom. Every penny saved is a penny earned.

Imagine the effect of compounding if you were able to save $100 a month and invest it in an instrument that gives you 5% returns per annum. After 30 years, you would have a pretty cool sum of money.

So here you go. My own Top 10 Money Saving Tips:

1. Don't eat at fancy restaurants. If possible, eat at home. If not, just eat fast food. It is much cheaper than eating at a fancy restaurant. Don't upsize your meal. If you just want a burger, order a burger instead of adding a meal on top because it seems like value for money to pay an extra dollar to have a large fries and drink.

2. Save electricity. Off all lights when not in use. Do not leave the heater on if you are not using it.

3. Cancel your global roaming. Most people have global roaming attached to their mobile phone plans. Cancel it if you are not going overseas.

4. Park at a cheaper carpark. Different carparks have different carparking rates. Choose the cheaper one and walk a little.

5. Read your news online. Don't buy newspapers everyday especially if you won't have the time to read it. Just read your news online.

6. Visit the Library. Don't spend money on books. Borrow books from the library.

7. Wash your own car. You save money on both petrol and the expensive car washing services provided by those petrol stations.

8. Pump a cheaper grade of petrol. The grade of petrol should not make much of a difference. I always believe that it is psychological feeling that people get when they use a higher grade of petrol and think that their car responds better to it.

9. Don't buy magazines. You can read them online too! Just surf the net and I am pretty sure that you will come across various sites that gives you the information that you want totally free of charge.

10. Give Starbucks a miss. A Caffe latte probably cost you around $5. That is money that could easily buy you lunch or dinner. Skip Starbucks and make your very own coffee instead.

So there you have it. My own top 10 list for saving money.


Read Related Articles:
1. Save Electricity, Save Money
2. Retire Young, Retire Rich
3. 3 Key Lessons from Rich Dad Poor Dad
4. 3 Sources of Passive Income

Saving and Spending

Below is a list of items that I am saving for and also items that I would like to spend my money on.

I personally believe that it is important to save/invest more than 10 percent of one's salary. Of equal importance is also to spend at least 10 percent of one's salary to make your home a better place for your family.

List of things I am saving for:
1. Retirement ( est. $1,000,000) ~ currently $70k
2. Son's education (est. $150,000) ~ currently $0 saved
3. My Second Home deposit (est. $200,000) ~ currently $80k saved

List of things I want to buy:

1. A piece of Art to hang on the wall. Bright coloured. It will brighten up my house and make it a much nicer place to live in (Budget $100)

2. Window Grills. For safety reasons as my little boy grows up.

3. 3 x Soap Dispensers (Those beautiful and classy kind of soap dispensers that cost around $20 to $30 each). 1 for the kitchen and 2 for the bathrooms.

4. A nice swivel chair to use for the computer. (budget $200) Will probably buy this from Ikea

5. A door to prevent my boy from entering the kitchen. (est $400)

6. A nice chair for the living room. (budget $200)

7. An air conditioner for the living room. (not sure how much it costs)

8. A Wii / PS3 / X box (purely for entertainment sake)