December is an exciting month, with our social calendars filled with end of the year parties and events. It is a time of celebration, of reflection and of course planning our new year’s resolutions.
Among the top resolutions made each year, saving more money is right up there, alongside eating healthier and exercising more. And just like trying to squeeze in a workout is hard to do when our schedules get very hectic, sticking to a budget is not an easy task. It requires constant effort and it’s easy to fall off the wagon. Unexpected expenditures can come up and it can feel constraining to have to restrict your spending.
However, taking control of our finances is one of the most important aspects of being independent and feeling empowered. Saving and investing for the future becomes an even more pressing issue when you live in one of the most expensive cities in the world.
A “Millennial Survey” conducted by CBRE in 2016 revealed that Hong Kong Millennials (Aged between 22-29) dined out an average of 11.7 days a month, which was the highest around the world. 92% of Hong Kong millennials also admitted to spending more than what they had planned when making non-food purchases online. On the other hand, the study also revealed that Hong Kong millennials saved 33% of their disposable income while the global average was 20%.
Dining out a little too often and giving in to online splurges is something that we’ve all been guilty of. As we enter the new year, we’ve outlined some tips that can help you keep better control of your finances for 2019.
Keep track of what you are spending
Most of the time we pay for goods and services without really being conscious of the amount we’ve spent. As the world moves towards a cashless economy, it becomes even harder to keep tabs on the amount of spending we incur every day.
For example, numerous studies have revealed that paying with a credit card is less painful than using cash. It makes sense, when you pay with a credit card there is a significant time lag between the time when you make the purchase to when the bill has to be actually paid. So this disconnect actually increases your likelihood to spend more vs. using actual cash.
Neat Personal is a free current account and provides you with access to the Neat App and a pre-paid Mastercard. It allows you to keep track of your spending and analyze weekly, monthly and yearly spending. You can also compare your spending trends and see whether you’ve spent either more or less than the previous time period.
Users also get a push notification after every transaction, which helps visualize spending. When you check the Neat app, you will immediately see the amount you spent deducted from your account.
Pre-paid cards also allow you to keep better track of your spending; you are not borrowing money so there is no need to worry about debt or paying back high-interest rates. Another advantage of pre-paid cards is that they are a great way to manage to spend by setting a pre-fixed budget beforehand.
Setting a monthly budget
One of the key factors to consider when setting a goal is to make it specific. Studies have shown that your chances of achieving your target increase the more detailed you get. So instead of saying “I want to save more money next year”, a better goal would be to say, I want to spend 10% less on dining out next year”.
Setting a budget can be done in various ways and you should choose whatever works best for you. You can set a general monthly budget or you can determine different spending categories and assign a budget to each.
The Neat Personal app, for example, will group your purchases under different categories such as food & drink, groceries, shopping, bills & utilities, and transport. After doing an analysis of the average spending that goes into each of these categories, you can determine an appropriate budget goal for the upcoming year.
Managing your Business Finances
Sticking to a budget is just as important when running a business as in your personal life. If you are just starting out, you don’t want to burn all your cash within the first months of launching. And you want to make sure that you are spending in the areas that will eventually lead your company to grow.
An important point to make is that no matter how small your business is and even if you are not producing any revenue yet, it is important to keep your personal and business accounts separate. This will help in keeping you more organized, keep your business more professional and it’ll be easier in the long run for accounting and bookkeeping purposes.
Neat Business is a modern current account for your business that can be managed completely online and provides startups and SMEs with the tools to easily control your company’s expenses.
Using the business dashboard, you can keep track of your company’s spending, manage budget limits for each department or team, or set limits to each Neat prepaid MasterCard. It also saves you time as each transaction is automatically recorded into the Neat account, and team members can add photos of receipts, include notes and tags right onto the Neat Business app.
By tracking spending, businesses can identify any overspending issues, create more awareness of where the money is being spent, and account for factors such as business seasonality. Tracking your spending also creates a data history that will eventually be useful when planning for future budgets.
This holiday season, in between your social commitments and all that well-deserved celebration, try to carve out some time to set your financial resolutions for the upcoming year. It’ll help you get a head start to better financial planning.
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