As the use of digital payments become more prevalent and our society slowly transforms into a cashless world, it has become increasingly difficult to manage our personal finances. This is due to financial abstraction, which is the notion that when money becomes more of an idea and less tangible, it changes the way we interact with it. In today’s world, digitalisation furthers the abstraction of money. As the currency of today is digital, money becomes no longer real and tangible but is an illusion that still has very real consequences. To aid you in managing your personal finances in this cashless world, we have compiled 5 easily implementable tips for you!
Tip 1: Limit Your Spending with E-Wallets
Do you struggle with overspending during your shopping trips? Do you always exceed the budget you set out for yourself? An easy solution to that would be to limit your spending with E-Wallets such as Singtel’s Dash or YouTrip! These act as a cashcard linked to your bank account, where you can withdraw a specific amount into the card to use for payments. Existing as either mobile or physical cash cards, they will cap your spending at whatever amount you had inputted into the card. Once you have used up your available balance, you will have to transfer money into your cash card again. This additional step will increase the cognitive ‘pain’ felt from your spendings, which will hopefully help you avoid overspending or splurging!
Tip 2: Make use of debit and credit card promotions
This may appear to be a contradiction to the previous point. But credit & debit cards are not always a bad thing if you are aware of and limit your spending as there are many benefits that cards bring that you can take advantage of! These include discounts, rebates or promotions for restaurants, hotel stays, travel mileage, movie tickets, etc.
However, do be careful to not over-leverage! Ensure that your credit card bills are paid on time to avoid additional interest and late charges. It is also important to spend within your means and only undertake personal loans that you have confidence in repaying.
You can also set a spending limit on your cards that will cut off your card once you have spent beyond a specified amount.
Tip 3: Track your expenses
If you want to avoid spending beyond your means when using a credit card or simply want to have better management of your expenses, you can consider using a money tracking app! Most money tracking apps will allow you to input your monthly income as well as every expense made, be it fixed monthly bills or your shopping expenditures. Some apps even allow you to categorise your spendings so that you can have a clearer overview of the amount you spend in each category. Often, people discover that they have been spending far too much in one category (e.g. taxi rides, cafe food, etc.) once they start tracking their expenses!
Most people are hesitant to start using money tracking apps as they find it to be too much of a hassle. However, once you make it a habit to input your expenses right after you spend it or at night right before you sleep, you’ll realise that it’s a very simple and quick process that can even be done under 5 minutes! Having a better understanding of your spendings is the first step to better financial management and there are virtually no downsides to using a money tracking app. So what are you waiting for? Find one on your App Store or Google Play Store now!
Tip 4: Open two banking accounts
A perk of the digital age is that a lot of processes can now be automated, even your savings! Take advantage of our society’s cashless system by automatically wiring your monthly income into your savings account. You can then transfer out a percentage of it afterwards into a second account that is meant for spendings. This is the easiest way to ensure that you make consistent saving deposits since you save first before you take out money for spending. There are also other benefits for opening two bank accounts if you run your own business or often make purchases on behalf of your company. By creating a separate account for business transactions, it is easier to keep track of your business transactions for you to make claims and you stand to benefit from the perks of both banks (provided that you create the accounts with different banks).
Tip 5: Invest for passive income
One of the financial buzz words of today is “financial freedom” which refers to having enough cash, savings and investments stashed up to be able to afford your current lifestyle without having to earn a certain amount every year. A smart way to begin your journey to financial freedom is through investing a portion of earnings so that you can make your money work harder for you. Investments may seem very daunting, especially if you are new to it or do not have a lot of money to invest currently. However, with the rise of alternative investments such as Peer-to-Peer (P2P) lending, you can start investing with just a small amount of $20!
P2P lending allows individual investors to invest directly in their chosen SMEs that are in need of financing, to earn an interest in return. You can find out more about P2P lending here ! Funding Societies is the largest P2P lending platform in Southeast Asia and is licensed by the Monetary Authority of Singapore (MAS). If you are looking to start making P2P investments, click here to find out what you can expect when investing with Funding Societies!
It’s important to gain financially-relevant experience on in your life so that you’ll be able to better navigate today’s cashless society and have a greater chance of achieving financial success later on in life. Thus, it’s time to start applying these tips to achieve the life that you dream of!
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