| Financial planning requires you to think logically and | | | | From there I will analyze how much do I spent on food |
| carefully about your own lifestyle. After thinking | | | | per month. I do not include dinners in restaurants, |
| through the various aspects of your financial situation. | | | | because if I were to fall back on my savings, I will cut |
| Determine the financial strategy that you are going to | | | | out dinning in restaurants and opt for cheaper food. |
| adopt. | | | | The statement gives me a clear picture of my |
| I often hear financial planners and consultants blabber | | | | spending. Just like the above, I take the highest among |
| on about having at least six months' of salary as | | | | all the month and multiply that figure by six. |
| savings. Financial planners often repeat that without | | | | Debts |
| giving it much thought. I prefer to think out carefully | | | | Ah, this is very important to me. Even if I were to fall |
| about my own lifestyle and determine how much | | | | back on my savings, I make sure I can pay my debts. |
| should I save. To tell you the truth, I do not like to save | | | | This is especially so for my housing loan. If I were to |
| too much. Keeping too much of my cash in the | | | | become a bankrupt, all my unsecured debts will |
| savings, prevents me from generating more returns | | | | disappear but my housing loan does not. Therefore I |
| from investments. Just telling me to keep six month's | | | | take extreme care in making sure I can service it. This |
| worth of salary in my savings is not clear enough for | | | | is a bit trickier. Work out the total monthly debts that |
| me. So how do I determine my savings? | | | | you have to service and multiply by six. If most of your |
| Utilities Bill | | | | debts are unsecured, I will multiply the figure by another |
| I keep a close tap on how much are my utilities bills. | | | | 1.5. |
| Well, its not that difficult anyway. I just keep all the bills | | | | Policies and Investments |
| in a file! Keep it long enough and you will see that the | | | | Certain policies and investment plans requires you to |
| bill for every month is more or less the same. Choose | | | | make a monthly contribution. This is very clear cut. Just |
| the highest utilities bill you had for any months and use | | | | total all of them and multiply by six. |
| that as a benchmark. I choose the highest and I multiply | | | | Finally, I will total all of the above figures and viola! That |
| by six. | | | | will be the safety cushion for those six months. This is |
| Food | | | | what I call "Lean Financial Planning". To fully employ |
| This is a lot harder to keep track. For me, I make sure | | | | "Lean Financial Planning", I will make sure that the rest |
| that all of my purchases is done through my DBS | | | | of the money goes into investments. Of course I will |
| Master Debit Card. At the end of every month, they | | | | set aside a bit of "Play Money" as well, all work no |
| will send me a statement stating every transaction. | | | | play makes Jack a dull boy. |