Dealing with Retrenchment
From Financial Literacy Wiki
Dealing with Retrenchment
Here are several steps you can do when you are retrenched to manage you finances better.
Contents |
Do a health check on finances
Check out the amount of funds you have and how long it can last. They should be liquid such as cash, bank accounts, time deposits and money market funds.
Total up you monthly expenses, also taking into account the once a year expenses like insurance premium, road tax(if any).
From here you can decide how long your funds will last you in terms of months.
Take stock of you budget
When you are looking at your monthly expenses, do go through each and every expenses and ask yourself if they are essential or non-basic. If they are essential, can you make do with the second best option. If they are non-essential, well, can you postpone the purchase or not purchase it at all. Try to stretch your dollars as much as possible.
Resist using your credit cards for your purchase. Unless there are substantial discounts to purchase otherwise, try to pay everything preferably by cash. Paying by cash allows you to see the outflow of cash, as such you will feel the 'pain' of seeing money moving out of your pocket.
Loans Refinancing
If you have a mortgage loan, assess how many months of your instalments can be service by your CPF. During a recession, usually interest rates are low, as such, take the opportunity to switch to a better loan package to reduce your monthly payments. Sometimes, the bank will allow you to only pay the interest on the loans, reducing your monthly payment substantially. (Please see article "DBS launches special interest-only mortgage" )
If you own a car, you might take the opportunity to assess your car usage and see if there is any chance of reducing a smaller car or enrol your car into the Off-Peak Car Scheme. Reducing to a smaller car can save on petrol costs, motor insurance premiums and other related costs.
Insurance Restructuring
Do not terminate your insurance plans to save on premium unless it is the last resort. These plans might just give you the much needed income when accidents happen. Instead, try to talk to your agents to restructure your premiums, seek out premium holidays or schemes that helps the retrenched to keep part of coverage with a lower premium.
Consolidate bank accounts
Most savings account pay interest on a tiered basis. As such consolidating them into one account allows you to earn more interest on your liquid assets.
