Money management

• Need


  Something necessary for us to live and function properly
• Needs


  • food such as rice, meat, fruit and vegetables
  • clean water to drink and to wash in
  • shelter
  • medicine when you are sick
  • basic clothing suitable for the climate and for modesty, to protect the wearer and keep them safe
  • utilities - such as electricity and water
• Want


  Everything else - things we would like to have but that are not absolutely necessary for our survival
• Wants


  • fashionable clothing and shoes
  • luxury foods
  • toys and games
  • equipment for hobbies and interests
  • holidays and travel
  • personal preference for a particular brand when other cheaper versions are available
• Needs are something we cannot live without
• Wants might sometimes feel very important, but they are not essential for us to live
• Eating out


  Could become a need if there are no other options, such as being too busy to prepare food or being away from home
• Eating out


  Could fulfil other wants, such as the desire for a particular type of food, or wanting to eat with friends
• Preparing our own food at home is often more affordable
• We can also eat out without spending too much money, for example, at hawker centres instead of restaurants
• Budgeting


  Creating a plan for how best to save or spend our money
• Budget


  A spending plan that gives us a clear picture of what we have and what we need, so we can plan our spending wisely
• Income


  The money we receive, for example from work, gifts, pocket money or selling things we do not need anymore
• Expenditure

  Money we pay for things we need or want, sometimes referred to as 'expenses'
• If we do not have enough income, we might need to cut back on our expenditure
• It is recommended to set aside 20% of our income as savings during budgeting
• Budgeting


  • Allows you to control your expenses so you do not need to worry about overspending
  • Helps you save money for things you need
  • Reminds you of how much money you have available
  • Helps you stay out of debt, or pay back any money you owe
  • Helps you see what expenses you are expecting, so you can plan how you will pay for them
• Inflation is the increase in prices of goods and services over time
• Saving money might even earn you more money - your bank will pay you interest on money in your savings account
• If possible, you should try to save 20% of your regular income
• Everyone should save even if you can only save small amounts each time. It all adds up!
• Saving money is a very important part of being a smart money manager
• Set aside your savings first before spending on needs and wants. This is the best way to manage your money - it means you do not spend more than you have
• Living within your means


  Not spending more than you earn
• If money is borrowed, it should be repaid as quickly as possible to prevent debts from building up
• It is important to set some money aside (savings) in case of unexpected expenses or emergencies
• When you borrow money from the bank, you have to pay an additional charge on top of the amount borrowed. This additional charge is called 'interest'
• The more you borrow, the more interest you have to pay. The longer it takes to pay back the debt, the more interest you pay
• Cash


  Payment is made using cash that is normally in the form of coins and banknotes
• Cash


  • Cash is generally acceptable in most stores
  • You can manage your spending with cash, as you can see at a glance how much you have left
• Cash


  • Cash can be lost or stolen
  • Cash cannot be used for online transactions
  • It is difficult to use cash to pay for large purchases
• Debit card


  A card issued by a bank that allows you to pay for goods and services by electronically taking money from your bank account
• Debit card


  • You can keep track of your purchases online as most will show up quickly on your account
  • It can be used to withdraw cash from your bank account, for in-store purchases, and for online purchases
  • You can only spend within your means i.e., you cannot spend more than what you have in your account
• Debit card


  • You must have enough money in your account for purchases
  • Risk of fraud. You can reduce the risk by not sharing your debit card details and one-time password (OTP) with anyone
• Credit card


  A card issued by a bank that allows consumers to purchase goods and services on credit, with a monthly bill generated for payment
• Credit card


  • You can make your purchase first and pay only when the bill comes
  • It can be used for in-store purchases and online purchases
  • Major credit cards can be used worldwide
• Credit card


  • There is a risk of overspending - you may lose track of how much you have been spending
  • Interest charges can be very high if you delay repayments
  • Large debts can easily build up if you do not spend within your means
  • Risk of fraud
• Electronic transfers


  Money can be transferred electronically with online banking or through a smartphone
• Monthly bill


  Listing all expenses to be paid
• If full payment is not made


  An annual interest rate will be charged