Budget is not a word many people like to think about. But with these tips, you can now face it without much fear.
WORDS SHEILA BERMAN
Budget.The “B” word.
How many of us cringe when we hear it? The word “budget” elicits different reactions: fear, anxiety, or indifference. Rarely, though, does the word make us jump with joy.
As women, we hear many myths relating to our ability or inability to manage money. One of these myths is that women don’t know how to handle money, or anything related to finance. Global trends, however, indicate otherwise: in the Asia-Pacific region, the vast majority of entrants into the accountancy profession are now very much tipped in favour of females.
Why then does the myth persist? Because women also believe it. As a result, it becomes a self-fulfilling prophecy when women get into debt because they claim they don’t have enough money. In reality, one reason why women don’t have enough money is the inequity of salary between women and men. Men, especially in Singapore are still paid more than their female counterparts.
According to a wage analysis done by ValuePenguin from data
taken from the Ministry of Manpower, the median gross monthly
income of men was S$3,991, 18 per cent higher than the median for
females at S$3,382. In some industries, the pay gap reached 40 per cent!
Another factor is that women are usually the default money handlers in the home. Often, they are the ones who see the bills and pay them, all while allocating and juggling their monetary resources. As a result, women are the ones who experience the anxiety and stress of managing the household finance and debt. The latest Singapore statistics show that personal loans account for 25 per cent of total household liabilities. That’s $80.9B of personal loans, excluding mortgage loans.
So, ladies, there’s no need to beat yourself up when you feel overwhelmed by all the bills you have to pay or when you feel that there’s not a lot of money to spare. What matters is what you can do to lessen the stress of managing your money.
Creating a budget can bring you great benefits. Some of the benefits of having a budget are: 1) helps you organise your spending and savings, and 2) keeps you focused on your money goals.
With this in mind, Jana Rackova, FCCA, and Iryna Fishchenko, licensed financial advisor conducted an interactive workshop on 3 May 2018 where they showed the attendees how easy it is to build a budget.
6 Easy Steps to Budgeting Bliss
“Your income is any money coming in,” said Iryan Fishchenko, licensed Financial Advisor and co-chair of the Finance group of PrimeTime Business and Professional Women’s Association. “This includes your salary and other passive income stream, such as interest, dividend, and rent collected.”
“For Singaporean salary earners, you need to identify your Net income as opposed to your Gross Income. Your net income is your monthly salary less taxes, CPF contribution and other government payments,” said Fishchenko.
“Your expenses are the money coming out,” Fishchenko continued. Examples of these are loan repayments, utility bills, mobile bills, gym membership, subscriptions, grocery bills, salary paid to household help, school fees, petrol.”
There are fixed expenses and variable expenses. Fixed expenses
are those that are consistent in amount or don’t fluctuate too much each month.
The examples are school fees, mortgage, car loan repayment, etc.
After determining your fixed expenses, identify your variable expenses. Variable expense are those expenses that tend to change based on usage. These are the expenses you have control over. Examples of these are grocery bills, clothes and shoes shopping costs, entertainment, etc.
After classifying your expenses, review the variable expenses and decide which expenses to prioritise and where you can save by cutting back.
Monthly credit card statements are good sources of information on your spending as they detail what you buy. Review your statements monthly not just to check for possible fraudulent activities but also to review the categories where you are spending most, i.e. entertainment, travel, etc.
It’s a pain but tracking your expenses can show you patterns in your spending. You can use pen and paper if you’re old school, an excel spreadsheet if you’re into graphs and charts, or mobile application if you’re constantly on the go.
“Budgeting is a rewarding process,”said Jana Rackova, FCCA, Regional Financial Controller at Spruson & Ferguson (Asia) Pte Ltd. Once the expenses are covered, saving becomes easier. “Practice the golden rule,” continued Rackova. “Allocate 50 per cent of your budget to spending on essentials, 30 per cent on wants, and 20 per cent to savings.”
Sheila Berman, Deputy Marketing Director – PrimeTime Business and Professional Women’s Association