Pay yourself first

In recent years, there were various articles on increasing trend of Singaporeans defaulting on their credit card payments. This is a worrying sign in Singapore. In fact, one of my readers commented that he belongs to the group of credit card payment defaulters and is struggling to settle his mounting bills. I hope he managed to dig his way out of the hole he created for himself, but I suspect it is going to be a long and tough road for him. I believe this is also the case for many young Singaporean adults who just entered the workforce and spend lavishly. In this article, I will share my thoughts on how to pay yourself first.

Financial Discipline
When I just started out working, I always thought that credit card gives consumers a false sense of purchasing power. It was only until when my brother, who works in the credit department of an international bank, pointed out that the key to managing credit card spending is financial discipline. It was then that I corrected my thinking. Having many credit lines or credit cards is not a bad thing in itself. After all, we can make use of the various point rewards, rebates or discounts that credit cards offer.

Furthermore, credit cards can be handy if you are buying big-ticket items. The focus should be to cultivate good spending discipline and live within our means. Every month, I received cheques from credit card companies like DBS and Citibank offering their credit facilities, I always torn them up simply because I don’t need these credits to spend.

Managing your credit cards
I own more than 10 credit cards for 8 years but I had never spend a single cents on membership renewal. I always make it a point to call the credit card companies to waive off the charges. In total, I had saved more than $10,000 on membership fees over the years. Most consumers need to realise that credit card companies make most of their money from merchants and not from membership fees, so they are often more than readily to waive off the membership fees because they want consumers to spend. In addition, although I own many credit cards, most of the time I only use 3 cards. The rest of the cards would be used only if there are special promotions.

Secondly, I always pay myself first. I set aside a portion of my savings to be automatically banked into my saving account every month on my payday. Whenever I received my credit card bills, I always set reminder in my phone to pay the bills only on the due date.

I am still building my wealth now but I believe in asset diversification and building wealth with real assets like gold bullion. In Singapore, you can buy physical gold and silver from BullionStar, one of the largest bullion dealers in Singapore. Have you pay yourself first?

Magically yours,