4 things to do to give yourself an annual financial checkup

4 things to do to give yourself an annual financial checkup

Despite the fact that Singaporeans fret so much about money issues, so many people do absolutely nothing about their finances other than show up at work each day.

Well, guess what, working hard and trying not to let your shopaholic partner spend all your money aren't the only ways to improve your financial health. Just as you should be going for regular medical or dental checkups, there are a couple of things you should do each year for your finances.

Review your budget

Many moons ago, you came up with a budget, dividing your spending into various categories like food, shopping and entertainment.

Unfortunately, if you came up with those figures back in secondary school, unless you still have access to your former school's canteen, you'll probably need to update those figures a little.

In addition, over the years, you might have to add or subtract certain categories because, well, time changes people and their needs.

For example, if you recently had a kid, you get to open up entire new categories of spending like "baby food" and "tuition". And you can probably get rid of or at least drastically reduce your budget for "clubbing" and "socialising", at least for a couple of years.

Automate your payments

So you signed up for five new credit cards this year, and you're just about going crazy fielding all the bills and trying to remember to pay all of them on time. It's getting so stressful that you're contemplating training your maid to pay them on your behalf.

Review all the bills that come your way at least once a year and then automate as many of them as possible. It will save you tons of time during the year because seriously, what's the point in wasting hours each year watching your life pass you buy as that guy in front of you takes 2 hours to figure out how to use the AXS machine, or constantly fumbling with your ibanking token?

Credit card bills can be paid by Interbank GIRO so you'll never have to worry about missing another payment. As for other bills like insurance and so on, check if you can pay them automatically by credit card or by deduction from your savings account.

Rebalance your investment portfolio

Even if you're the type of person who professes to be a "long term investor" and you rarely check your investment portfolio, it needs to be rebalanced from time to time.

Let's say you painstakingly worked out the proportion of your money you would put into riskier stocks, and the percentage you would put into something safer like blue chip stocks or bonds. You'd probably be expecting your safer investments to perform more modestly than the risky ones.

Over time, if your riskier investments do well, you might find that a huge proportion of your total portfolio is now in riskier investment vehicles. And if your risk appetite isn't that high or you're looking to retire in a couple of years, that's something you're not going to be comfortable with.

Rebalancing your portfolio involves reallocating your investment income to stick with your investment plans so your portfolio never gets too risky or too conservative for your liking.

Get rid of unused accounts and credit cards

In the fickle world of finance, something that was once fantastic rarely continues to be as good in a year or two. Credit card benefits change, and what was once the best high interest savings account in town eventually gets trumped by another bank's offering.

That also means that every now and then you'll want to switch to using different cards, or shift your cash savings into a different account.

Unfortunately, it also means you're left holding on to several worthless pieces of plastic you'll never use again but for which you might be charged annual fees if you're careless, or keeping open near-empty bank accounts.

Once a year when you do your annual financial spring cleaning, close all the useless accounts you have and cancel the cards or subscriptions you no longer need. If you were forced to keep a token sum, say of $500, in a bank account you'd forgotten about, you get to claw all this cash back and proudly add it to your main savings account.

If you're more worried about underutilising your credit cards but still want to keep them, MoneySmart's just come up with the solution for that. Swipe is a new app that helps you to find out which cards you should use for the best discounts in town, and plan your credit card usage in a much better manner as well.

This article first appeared on MoneySmart.sg.


MoneySmart.sg is Singapore’s leading personal finance portal, and aims to help people maximise their money with powerful tools and engaging content.

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