From The Straits Times    |

4 ways to know you're financially stable.jpg

Image: Sesons.Agency/Jalag/Pospieszynska, Agatha/Click Photos & 123RF.com

#1 You can spend on non-essentials without feeling guilty.
Set aside a budget for fixed expenses (like groceries and transport) and discretionary ones (such as dining out and holidays) – and stick to it, instead of using your gut feel to gauge if you are spending within your means.

#2 You can afford to have work-life balance by switching to a lower-paying job.
Eliminate unnecessary debts like unpaid credit card balances, because they reduce your cash flow. For obligations like a mortgage and car loan, your overall debt should be capped at five times your annual household income by the time you’re 30. This figure should drop to four times as you hit 35.

#3 You are equipped to deal with unexpected expenses.
Save up at least six months of your monthly pay – the minimum you’ll require to deal with unforeseen expenses such as home repairs and medical treatment.

#4 You do not dread retirement.
Do your sums now! Know exactly how much you need to retire comfortably, taking into consideration the predicted number of years you’ll live and your monthly expenditure, among other factors such as inflation and investment returns.

Expert source: Gregory Fok, certified financial planner

This story was first published in Her World Magazine September 2015.

Did you know that money is the root cause for many domestic problems — it is the main reason for divorce in Singapore! Check out these 50 top tips for managing your money better.

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