#1995 | The Broke Student’s Guide to Managing your Finances

Let’s call a spade a spade – I travel a lot.

Recently a lot of my travel has been campaign-based, but ever since my exchange days in Germany, I’ve gotten a ton of emails and questions regarding finance management and trip planning. Back when I had ask.fm, I would get an average of one question every two days regarding how I fund or save up for my travel. My standard answer used to be: I work my ass off for it. But while that was and is still true, I realise that that hardly helps anyone when it comes down to actual finance management. Which brings us here today: presenting the Broke Student’s Guide to Managing your Finances!

A disclaimer or two before we begin:

1. I know the current trend is championing this idea that travel is a new age necessity that will transform you magically into a new and improved person with better cultural sense and informed world views. This is not what I stand for. I’ve seen people who travel extensively and who remain as narrow minded as ever. Some of the wisest people I’ve met have never stepped out of the region. The idea that travel makes you better than somebody else is a mentality that I cannot get behind – so this post isn’t about that, but about hopefully helping those of you who want to plan towards saving for travel or other purposes.

2. I wouldn’t consider myself a financial expert, so don’t take this as a professional opinion. This is for those of you who’ve been following me for a while and want to know how I manage my finances to independently fund what I do.

Okay? Okay. Let’s begin.

The two things I learnt from Confessions of a Shopaholic are – Cut Back or Make More Money. That, and if you’re annoying enough, someone will eventually fall in love with you. Thanks, Sophie Kinsella. Now, despite my boyfriend thinking that chick lit is embarrassing and useless, I’ve found the two to be largely true for any kind of financial management. I can’t advise you guys on how to make more money because everyone specialises in different things and I’d be shooting my mouth off blindly. But here’s what works for me and how I Cut Back – ie. Save.

1. Know your spendable money

Different people call it different things, I call it spendable money. This is essentially the amount you have to comfortably spend within. For example – if you’re earning $1,000 a month giving tuition while studying, that doesn’t mean you can spend $1,000 every month. You need to know what your monthly commitments are and deduct that amount to have a more realistic idea of what you can work with in terms of saving and spending. For example, my monthly fixed costs include my phone bill, my church tithing, the money I give my parents monthly, and my gym membership. In my mind this is a fixed monthly cost that I always mentally deduct from my total earnings that month. You need to know what your fixed costs are to know what your spendable money is.

2. Set a general budget for yourself

Now that you know what your spendable money is, you have to apportion it. My rule is to spend at least 40% less than what I earn every month. I also have certain rules for myself per month – a cap on how often I eat out, how often I shop, and so on. For example, one of my personal rules for shopping is that I’m only allowed to buy something online or offline once a month. When I look at a dress I think to myself: do I want this or do I want to go to Japan next year? I want to go to Japan. No dress for me, then. This forces you to be more creative with what you have. I’ve worn the same black skirt about five hundred times in the last year, but no one has accused me of repeating my outfits yet because I force myself to style it differently every time. And I got to go to Japan in May with the money I saved on the seven other skirts that looked kind of but not exactly the same as that one, amongst other things.

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To set a general budget for yourself you can use various online and offline templates. I would suggest writing it down because that makes it more real for me, which you can do in a yearly planner like the one I designed.

Ha!

3. Track your finances.

Ever have that feeling at the end of the month where you just don’t know where all your money went? Yeah, been there.
What I do and have been doing for the past three years, is track my expenditure on my phone using various apps. I can’t remember what I used when I was on my windows phone, but now on the iPhone I use Moneyboard, which is a free app that allows you to enter income and expenditure, broken down into different categories like Shopping, Eating, Travel, Public Transport, and so on. It gives you a quick transaction overview of your total balance at any one time – money in, money out, and what you have.

I write every single thing down. Bought an egg to snack on for fifty cents? Write it down. Paid my phone bill of forty bucks? Write it down. Lost my wallet with fifty bucks in it? Cry, then write it down.
It really helps because firstly, you can actually see where your money is going, and secondly, psychologically you’re less likely to spend money because you have to write it down.

4. Set your goals.

What’s your long term goal? Having SGD$30,000 in your bank account at the end of next year? Cool. Write it down, then work towards it. This is something that once again psychologically spurs you on to saving towards something, and to some extent stops you from splurging unnecessarily. When I was a year two student and saving for my exchange, I kept an electronic piggy bank and slowly deposited money in it until I reached my exchange savings goal of SGD12,000 – the estimated cost for an NTU-Germany exchange program.

What I did was open a savings goal within my iBanking account , and set a recurring amount to be transferred automatically into my savings goal, so it became part of my monthly fixed cost. When you put money into the savings goal, you can’t withdraw or use the money on your card/ at the atm. The bank locks it in. So if you want to withdraw money from the goal you’re gonna have to go through the iBanking page etc etc… which means you’ll probably try to save yourself the trouble and not do it at all, keeping the money safe in there for whatever long term purpose you’d like!

5. Get insured.

All Singaporean citizens and PRs are automatically insured by MediShield Life, which is a basic health insurance administered by CPF Board. More here. But on top of that, you should definitely check with your parents if they’ve bought any insurance plans for you, and what else you need. Medical bills can bankrupt you. I’ve had so many friends and family come into close brushes with things like that that it really bothers me when people don’t think they’ll ever need insurance. It’s a lie. Everyone needs insurance. Or one day you might fall down break a bone, lose your ability to walk, and go bankrupt. Excuse the dramatics.

All the same, you need to make sure you’re not spending on plans that you don’t need. For example, I wouldn’t buy a term insurance until I have children, because it’s not absolutely necessary. To know what you need and what you don’t, you need to find an insurance agent that you trust to give you reliable advice. I would also buy insurance from more than one company, just because I don’t think it’s a good idea to put all your eggs in one basket.

6. Make sure you’re getting your CPF contributions

I’m excited about this because as a Masters student I get CPF. Ha!

But just a good to know – as long as you’re earning a minimum of fifty dollars a month, even if you’re a part timer, your employer has to put money in your CPF account. If you earn SGD500 or less, only your employer is required to contribute to your CPF. Ie. If you’re earning SGD500 a month as a part time sales person, your employer has to contribute approx SGD80 to your CPF on your behalf, which works out to almost SGD1,000 a year. You can’t use your CPF until you decide to buy a house, or want to pay for your kid’s education, but it’s still money that your employer needs to give you, so definitely check with your workplace to make sure you’re receiving it. You can learn more about CPF contributions on the CPF website.

And a special note for the Singaporeans working abroad:

7. Check your tax rebates.
This is something you’ll miss out on if you don’t check. For Singaporeans (or any foreigners, actually) working abroad, you should get a rebate on taxes that can amount to a couple of hundred dollars. This varies from country to country but I would definitely check it up with my employer because there’s no harm in doing so!

Okay, so that’s about it from me. I hope this was helpful to those of you who are looking to get started on financial planning and your personal finances. If you have any of your own tips feel free to leave a comment or email me, but otherwise, happy planning and see you on the other side x
x
♥jem

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