July 22, 2021

3 personal finance rules to live by

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When I first started working, I could not seem to get my finances in order. I could not save more, spend less. After one year of work and a few impulse buys later, my bank account was less than stellar. Initially, there was a lot of internal guilt tripping when I couldn’t reach my finance goals, and not to mention the anxiety I felt looking at my peers advance ahead with their finances at a much faster rate than me.

It’s easy to see why money can be such an emotional topic for some. But we all know that money and emotions is never a good combination. So what can we do to hack this cycle of spending and saving?

I’m happy to report that after a few years of adulting, and many tips from many finance bloggers and vloggers later, that I live by these 3 personal finance rules to help me reach my goals on time (or faster).

#1 Build an emergency fund

The first rule of thumb is to have an emergency fund. Its importance should be abundantly clear, seeing how the global economy was turned upside down in 2020. Uncertainty is still in the air today, but really when is it not?

The recommended emergency fund should cover 3-6 months of expenses, or 6 months of your income. Personally, I prefer having 6 months of income as backup, simply because it gives me much more room to work with. But you decide what is realistic for you.

If you’re anything of a math dummy like me, it would be best to create a second savings account that acts as a deposit for your monthly savings. Money Smart has an excellent summary of the best savings accounts in Singapore.

A quick google search will lead you to several savings strategies, the most popular one being the 50-30-20 rule. In short, the 50-30-20 rule states that you should divide your finances to 50% to needs, 30% to wants, and 20% to savings. You can tweak this to fit your lifestyle, I can do 60% expenses and 40% savings comfortably.

#2 Track your expenses

Nobody likes sitting down after work counting receipts. But this is the best way to get things in order if your expenses always seem out of control.

This rule is a no brainer. You could do it on a good ole’ spreadsheet, or use an app to track each transaction you’ve made. Just, literally, write all incoming and outgoing money down.

What you get at the end of the day isn’t just a glorified receipt. It’s data, which will point you in the direction of how you can better manage your money. And that’s immensely better than drowning in guilt and shame.

Start with just tracking your expenses first (though the side effect of writing down everything is that you’ll be more conscious about your spending too). After the first month, you’ll get a sense of where you’re overspending and how you can cut down on that.

In no time, you’ll be optimising your finances like a true finance wizard!

#3 Pay debts

Watching your income get swallowed whole by debts stings. Getting over it should be anybody’s main priority.

Again, a quick google search will lead you to multiple strategies to payoff debts smarter. You can also check out an article we wrote previously about two strategies to payoff debts.

Really, the only piece of advice of advice I can give is to pay them on time. Huge debts weigh heavy on the mind and the heart. And sometimes that leads people to other unhealthy coping mechanisms, such as avoidance, or buying into dubious and risky investment schemes in the hopes of striking it big.

If your debts are too much to handle, give yourself some space to breath, calm down, before you re-look your finances. Try to approach it from a position of control. These are your finances, and you are the one in charge, not the other way around. Look into different personal finance tips and apply them consistently in your life. And whenever it gets too much, remember to carve out that space for yourself to process your emotions before you go any further.


Hopefully you’ve found these 3 tips helpful!

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