Financial Checklists

Can I Afford a Car?

• Do I need a car? Can I do with public transportation instead?
• How much cash can put into a down payment?
  Remember, the larger the dowpayment, the lower your monthly installments will be
• Do I know the effective rate charged on the hire purchase (HP) loan for the car?
• Once I have a car, what would be my monthly/yearly costs to maintain it?
• Is this within my budget?
  Your total loan commitments including your car installments should not exceed 40% of your gross income
• What are the available choices and options for me?
  Keep in mind other factors such as resale value, reliability, fuel economy, safety, warranty, maintenance costs and general features of the car when making your decision

If you know all the answers to the above questions, you may take the next step in purchasing a car.

Am I Ready to Own a House?

• Is my current income reliable?
• Do I have outstanding long-term debts such as car loans?
• Do I have enough money saved for a down payment and related costs such as legal fees, stamp duties, etc?
• Do I have the ability to pay the monthly installments comfortably?
• Do I understand the costs of home ownership such as maintenance, repairs, assessment fees, quite rent, utility bills, etc?
• Do my spouse and I have enough life insurance to cover the housing loan and household expenses in case of death?

If you have answers to the above questions, congratulations and good luck in your home purchase. If you don’t, work on the trouble areas until you are completely comfortable about affording a house and all the expenses in your daily lifstyle.

Am I Saving Enough?

• Do I save regularly?
• Do I save at least 10% of my net income?
• Have I saved 3 to 6 months of basic living expenses in an emergency fund that is easily available if the cash is needed?
• Am I saving enough for long-term goals such as a house or my children’s education?
• When using credit to buy big-ticket items, have I saved enough to make as large a down payment as possible?
• Am I saving enough for my retirement?

If you’ve answered yes to all of these questions, well done, you are on the right track to achieving financial freedom!

Are My Debts Manageable?

• Am I in control of my spending?
• Do I have a written budget that shows where my money is spent?
• Do I know the due dates of all my loan installments?
• Do I pay all my monthly repayments on time?
• Have I skipped or missed paying any of my bills?
• Do I know all my current loans outstanding?
• What is my current debt-to-income ratio? Is it below 40%?
• Am I a guarantor for any loans? If yes, is the borrower paying on schedule?
• Do I have a copy of my latest CCRIS report?

Use this checklist to make sure you are not defaulting any of your loans and are being a good paymaster. This is beneficial when you take on bigger financial commitments in future.

Prudent Spending

• Do I really need the product/service?
• Can I afford it in cash (is it within my budget)?
• Is there a cheaper alternative?

Take a few days to think if you really want the product/service to avoid buying on impulse.

If you cannot answer yes to all three questions, do not buy it. Always remember to make prudent financial management a way of life.