Financial planning tips for the new year

Many people spring clean their homes and refresh their wardrobes for the new year. Likewise, you should conduct a personal financial health check to ensure your financial plan is on track. Here are some tips to take control of your own finances now.

1. Review savings and spending

Review your bank and credit card statements from last year to spot trends. Think about what you have spent on and why. Are you spending more, or less on luxuries such as travel, impulse purchases and dining out? Which credit cards did you benefit the most from? As for savings, do you have three to six months’ worth of expenses saved for emergencies?

The UOB TMRW app provides personalised insights on your spending and saving patterns so that you can plan your finances for the months ahead. You may want to consider setting up a monthly funds transfer to your designated “rainy day funds” account. As that account continues to grow, allocate a portion of these funds for insurance and investment needs like large hospital bills or buying a home.

Can’t resist the temptation of weekend shopping sprees? Protect your money by locking up a portion of your savings with UOB Money Lock. Not only does it keep your funds safe from potential digital fraud and scams, but it also helps manage your money by preventing accidental overspending on saving accounts. Locked funds will continue to earn the prevailing interest rate of the current or saving account and continue to grow.

2. Maximise tax savings

While income taxes are unavoidable, you can stretch your dollar by taking advantage of tax reliefs. Consider contributing to the Supplementary Retirement Scheme (SRS)* or topping up your CPF Special Account for tax deductions. Not only will you lower your tax bill, but your future self will also thank you for growing your retirement nest egg now.

3. Protect yourself and loved ones from the unforeseen

Life sometimes throws us curve balls. Do you have enough death, critical illness and total permanent disability protection from your insurance policies?

Speak to a financial advisor to review your insurance coverage against current needs, and plug those insurance gaps while you’re at it.

While any talk about legacy planning and unforeseen circumstances are often uneasy conversations to have with your family members, it’s important to consider your long-term plans. Take the time to learn about Lasting Power of Attorney (LPA) and Advanced Care Planning (ACP). These are essential tools to prepare for unexpected events. Broach the topic by taking references from other family members and friends who have done such planning before so that this conversation becomes relatable to your loved ones. Setting up an LPA and ACP takes time, requiring open dialogue and careful planning. Starting earlier is better than later.

4. Review financial goals and gaps against investments

It is important to review your investments at least once a year. Consider rebalancing your investment portfolio to align with any changes in your financial goals or market conditions. If this is a regular practice for you, that’s great! If not, consider consulting a financial advisor to help you get started.

If you have trouble recalling your investments, consider setting up SGFinDex on UOB TMRW for a comprehensive overview of your savings and investments across various institutions.

5. Can your home loan cost less?

If your home loan is no longer in a lock-in period, it is a good idea to consult a mortgage specialist. They can help you explore options for lower interest rates and repayment terms that better suit any changes in your income, if available. If your mortgage is still under the lock-in period, consider setting a reminder to revisit your options when the loan expires. Keep in mind that every dollar saved is a dollar gained!

6. Hack promotions, handouts, bonus

The start of the year is an opportune time for banks to offer attractive fixed deposit or fresh funds savings promotions. Take some time to compare rates, as you may find offers that are not available throughout the rest of the year. Some promotions even provide guaranteed cash credits for depositing fresh funds into your savings account, on top of its base or bonus interest.

As for handouts like CDC vouchers, consider stretching their value by taking advantage of return vouchers offered by some merchants. These extra savings can add up and help you better manage the cost of living.

If you have received your annual bonus, consider setting aside a portion for retirement planning. It is a great opportunity to strengthen your financial future.

7. Empower yourself through financial education

The best way to take charge of your finances is to understand how these tips can benefit you. Begin your financial literacy journey by consulting professionals, attending workshops and talks, and reading articles from trusted sources. Like learning to ride a bicycle, what is uncomfortable at first will become second nature with practice and time.

*Personal income tax relief is capped at S$80,000 and this applies to the total amount of all tax reliefs claimed, including any relief on SRS contributions. Refer to full terms & conditions here.

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