5 ways to spring clean your finances before Chinese New Year

As Chinese New Year is just around the corner, it’s time to bring out your cleaning supplies. Traditionally, houses are thoroughly cleaned prior to the new year to eliminate the previous year’s misfortunes and make space for new, positive energy. But if your finances are in a state of a mess, then perhaps you should also spring clean this area of your life. In this Pacific Prime Singapore article, we’ll give you 5 ways to do so.

Contents

1. Take a look at your budget

First things first, do you live on a monthly budget? If not, you need to make one as soon as possible as it is the best way to stay on top of your finances. Budgeting helps you get to a better financial position by ensuring you spend within your means, and have money left over for savings and investments as well. If you’re not sure how to come up and stick to a budget, start by calculating your income, setting quantifiable goals, and keeping track of your spending.

2. Cut down on unnecessary spending

If you’re in the red zone or have saving goals to meet, say if you’re planning to put down a deposit on a house, then you may need to cut down on unnecessary spending. However, this doesn’t mean you have to live like a pauper and never treat yourself, but it’s about being smart about your money and making compromises. Make a list of where your money goes each month and ask yourself these questions:

Do I really need this?
How much do I use it and like it?
Is it worth that much to me?
Can I find a cheaper alternative that works the same?

3. Pay off any high-interest debts

Debt isn’t always a bad thing. Certain types of debt like credit card bills can be good, provided that you pay them off on time and the interest rates don’t accrue. Not only does it help you build a good credit history, but it also helps with your cash flow. The key is to refrain from spending beyond your means.

On that note, it’s the high-interest debts that you need to be wary of. If you currently have these types of debt to pay off, it’s advisable to save up for them and pay them off immediately. Debts like these can also affect other aspects of your life and take a toll on your mental health, which can also keep you from earning more.

4. Build and maintain an emergency fund

While budgeting is an essential part of staying on top of your finances, there’ll be money matters that you just can’t account for. For example, losing your job and source of income due to the COVID-19 pandemic, which no one in their wildest dreams expected. So to be prepared for these unforeseeable circumstances, it’s a good idea to build and maintain an emergency fund.

If you’re wondering how much you should save in an emergency fund, the guideline below might be useful:

3 months of living expenses: This works for those who are living with their parents or are single adults with no children or dependents.
6 months of living expenses: This works for those with a mortgage or have children or dependents.
9 months of living expenses: This works for those who are self-employed, freelancing, work in the gig economy, or rely on other unpredictable income sources.

5. Secure a health insurance plan

To avoid dipping into your emergency fund for medical bills, why not consider securing a health insurance plan? Medical expenses can be steep – especially if you face the onset of a serious illness and/or want to access the best healthcare there is to offer. A health insurance plan ensures that you’re protected and don’t have to worry about money.

Pacific Prime Singapore can help

Looking for a suitable health insurance plan for you or your loved ones? Pacific Prime Singapore has over two decades of experience helping locals and expats secure health insurance. We work with the top insurers to bring you the right plan for your needs and budget, as well as provide heaps of support and assistance along the way.

Whether you’re looking for individual health insurance, family health insurance, or any other health insurance plan in Singapore, you’re more than welcome to reach out to our highly-trained, impartial advisors for a free quote and plan comparison.

Suphanida aims to demystify the world of insurance by creating informative and engaging content. As a wordsmith, she spends the majority of her day writing and editing website content, blog posts, in-depth guides, and more.