Your 2018 Mid Year Money Review: 8 Things You Should Do
Keep the Money Train on Track
It’s a good idea to make time to review your money situation periodically. We’re a little past the middle of the year, but it’s still not too late to reassess your financials.
By running timely mini audits on your personal finances, you’ll be in the best position to identify poor money habits and rectify them early on!
Let’s take a look at the main areas of focus for your mid year money review:
1. Review your savings
Start by checking up on your savings account balances and consider if it is anywhere near your savings goals for the year.
If you have reached your targets or are on track – go ahead and give yourself a pat on the back! If you have an excess of funds to save, there’s a good chance you earn more than you spend and are a good money manager.
But what if you are nowhere near your savings goals?
First things first, take a step back and know that it is alright that you don’t have enough put aside just yet.
The truth is that, most Malaysians are struggling to save money, just like you. However, not having even a few months’ worth of savings to cushion you in case of emergencies could lead to trouble down the road.
To kick start your savings, it’s important to prioritise and set aside a figure you can afford. Ask your bank if they have a savings program – most do i.e. Maybank Flexi Saver Plan.
A savings program will automatically deduct a small amount from your account every month and put it towards a separate subaccount for you.
Such a savings program may grant higher interests for these special reserves and help you reach your goals faster.
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2. Plug money leaks
As a follow up to the point above, if you have little to no savings at all, there is a chance that you are leaking money unnecessarily.
So do list down your expenses and note the areas that could do with a cut, at least temporarily.
Things like having too many entertainment subscriptions or bulky phone and internet plans may need to be relooked, cut or trimmed, to help you save more.
3. Review credit card debt
So what do your credit card balances look like? Well, if you have only been paying the minimum, it’s quite likely that your debt is climbing steadily and will eventually become a problem.
Again, you’ll need to prioritise. Repay your credit card bills in full or as much as you can each month, with the aim to clear off the bills completely.
There’s more than just slimmer credit card debt that you can look forward to when making bigger payments on time every month and that is, lower interest rates.
If you make full prompt payments, you can earn back your interest-free grace period. Even just making the minimum on time for 12 consecutive months can put you in a low interest tier.
4. Consider consolidating your debt
As you ponder your credit card and personal loan debt, it may be a good time to find out if consolidating your debt can help you save more.
You have a couple of options for consolidating your debt.
For one, you could take out a lower interest, personal loan to cover current credit card debt. Depending on the loan amount and debt owed, you may be able to pay off bills with the highest interests or clear accumulated debt on multiple cards.
Here you’ll save on interests and generally simplify your situation by consolidating the debt.
Now all you’ll have to do is pay off your personal loan, which you’ve hopefully managed to secure at lower rates and in affordable instalments.
Another alternative to tackle your credit card debt is to consider a zero-interest balance transfer. How it works is that you may be offered a zero or low-interest rate to transfer credit card balances owed to another bank.
The offer typically comes with a condition that you must repay the loan within the set term or the rate reverts to the prevailing or other special rate.
This set term is typically from 6 to 36 months; depending on the bank, loan amount and other factors. If you can pay off your debt within the given term, then you will save on interests.
However, there are risks. For instance, if you default or are unable to pay, your interest rates may be higher than before. Thus, you’ll need to weigh the risks and potential savings as well as your ability to make repayments before taking up a balance transfer credit card.
5. Review credit card perks and rates
Along with taking care of and paying close attention to credit card debts, it’s also very important to make sure that your credit card makes sense for your lifestyle.
If you haven’t already, do study your credit card to ensure that you are taking advantage of all the extras afforded to you.
There’s no point in holding on to a card that offers incredible extras that you know nothing about or aren’t enjoying. It can also be quite a waste if you are paying annual fees and not reaping the rewards of a benefits-rich card.
Follow up with your bank and enquire about the perks that come with your cards e.g. cashback rewards, discounts, etc. You might also want to survey credit card promotions and compare it to the types of perks and rates you are currently receiving.
If you do find better cards on the market, consider signing up for it.
However, do note that depending on your earning capacity, you may not be allowed to hold more than two cards. If you are able to hold more than two credit cards, you don’t have to close the old credit card account, unless it is costing you money (e.g. annual fees, etc.).
Instead, clear up all balances and hold on to the card for emergencies. You may also want to hold on to the card to improve your credit score.
Access to greater amounts of credit generally reduces your utilisation and boosts scores.
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6. Think about investing
If you already have your reserves in a healthy position i.e. with six to 12 months of your income saved up, then you might want to wet your feet in the world of investing.
There are many ways to invest; from conventional stocks and bonds to unit trusts and FDs (which are technically more a savings instrument), as well as alternative investments like your own small business.
Now is the time to research and review your options to grow your money safely.
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7. Plan for upcoming expenses
Do you have any major expenses coming up?
For instance, are there upcoming car insurance renewals, road tax or servicing; property taxes or personal insurance plans to take care off in the next six months?
If there are, then it’s best to start planning for these expenses from now. This way, it won’t appear too overwhelming on your bank account when payments are due.
8. Remember the fun stuff
Last but not least, your money review should help you figure out where you stand in terms of achieving your life’s goals, apart from just paying for the necessities.
Once you have put aside a sufficient amount for bills, debts, savings, investments, taxes etc., think about how you can use your money to fund the experiences that bring you joy!
For instance, you may want to set off on a dream holiday with the whole family, see your favourite band play a concert or even give your money a philanthropic purpose.
So don’t forget to plan for these ideals and work towards it!
Best of luck with your 2018 mid year money review!