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The transition from the life of a student to that of a working professional would force most people to reconsider their finance management strategies. With an increase in income, you will have to make new decisions on spending and saving the money. While this is a process that requires constant improvisation,
Here are a few steps to get you started on the right path:
Making a financial plan is crucial to understanding your short- and long-term goals and deciding what it would take to reach them. Get as specific as possible when doing this, in terms of what you plan to do, where you want to reach, and the time you can afford to give yourself for it.
While creating the plan, remember to leave some room for flexibility, to be prepared in case you come across situations like medical emergencies. While you are at it, consider options like private health insurance plans as well.
As you begin to earn money, you may be tempted to spend as much as you can. But remember that the earlier you begin to invest some money, the better the benefits in the long term. There are several options to choose from in this regard such as fixed deposits, unit trusts, Singapore Savings Bonds, stocks, currency markets, and properties. Even a simple savings account offering higher interest rates is a good place to start. Just make sure you learn the nuances of each form of investment before going forward.
Remember that you should also invest in yourself. In other words, you will have to spend money on learning new skills and gaining more knowledge to help yourself get ahead in career and life.
Make sure you spend within your means. But more importantly, ensure that you spend on what you need and not on what you want. This does not mean you need to forego all your wishes but do make sure essential items like groceries, rent, and utility bills get priority. Making a shopping budget and ensuring that you stick to it is a great idea.
While making shopping plans, make sure you do not plan too far ahead to avoid overestimating your needs and buying up goods you do not actually require. Plan short term.
Regardless of whether you had a student credit card before or not, now is a good time to begin working towards a high credit score. There are several ways to do this but the most obvious is to make sure you settle up all your credit card bills in time. Research more on other steps you can follow as well.
Saving money is important. But to be prepared for unforeseen situations, start an emergency fund with money that you would require to live for a few months. This will come in handy if you are considering a career change or are in a situation where you do not receive regular income.
In short, developing a solid money management strategy is critical to making a financial plan. The steps mentioned above should help you get a good start on it.