6 SIMPLE RULES FOR MANAGING $$$

Dear all, these are the 6 simple rules to manage our money. I discovered these rules from one of the financial materials and it seems very useful for all of us. Hope you can benefited from it.

Global economic recession have risen sharply; in these turbulence times, what should you do with your money? Seek cover or enhance your financial portfolio?

With various financial products for saving and investment; it is really difficult to come up with a complete financial plan for ourselves and loved ones. So, most people turn to 6 easy rules which give them a quick and simple guide to make their finances under control. Here are the 6 rules:

RULE 1: Save a minimun of 10% of your monthly income. Obviously, save more is better. As you grow, your finances should improve and your saving rate should be increased.

RULE 2: Estimate your expences in your emergency fund. Life is very unpredictable and people can lose their job at anytime. If you have at least 3 months worth of emergency funds, you would not feel so stressful about it.

RULE 3: You need 70-80% of your last-drawn annual income for your retirement. This rule is just generally assumed that people will spend less after retired.

RULE 4: Your life insurance cover should be at least 7-10 times of your annual income. This is a basic requirement and it can be expanded as you go along. Life insurance is mean to replace one's economic value. So, when determining how much you need; consider the needs of your dependents, as the money is really meant for them!

RULE 5: Your home loan repayment should not exceed 1/3 or 33% of your monthly income. Otherwise, you risk having all your savings put into your own house. When the Base Lending Rate (BLR) is increased, your housing loan interest rate will definitely risen, at that time you will be pressure and might not afford to continue repay the housing loan.

RULE 6: As you get older, you should not take on too much risk. Over the years, you should lower your risk. Financial planners had point out that your investment goals also should take into account, you need to consider other important factors that will eventually guide you in your choice of investment. First, identify types of investment to participate; secondly determine what you intend to achieve in the short term and long term.


Best regards from,
Chee Wai