The end of the year is very often the equivalent of the receiving of AWS for “perm-staff”, which many also know as annual wage supplement or year end bonus. KECHING time!
I was having a casual chat with a colleague of mine over lunch this week when he remarked – “Hey have you checked your bank account yesterday?”
“Hmm? What for?”
I guess I wasn’t one of those who was very anxiously waiting for AWS to be banked into my account. He, on the other hand, had just bought a new car. Hmm.
Gone In 600 Seconds
That night, I took out my trusty little notepad and scribbled on it. My AWS was gone, just like that, in 10-minutes. I mean, most of the money is still sitting in my bank account unspent, but I had already budgeted it and given each dollar a job to do, which means I can no longer touch them.
A quick check online coincidentally landed a post by BULLy the BEAR who also tried the same app. Looks like there are a few common points between us haha!
I’m a big fan of budgeting and as a positive side-effect, I’m 99% sure of what expenses I’ll be incurring in a single year.
Budgeting Means Letting Loose
To me, budgeting means I can splurge on a nice dinner guilt-free. It means I can go crazy shopping on Black Friday and Cyber Monday. (but really, I only got a Jaybird wireless earphone on sale off Amazon and a 1-year paid hosting account for a ridiculous low price of US$1.16)
Budgeting doesn’t simply mean cutting back. On the contrary, it means letting loose on the things we really care about. In fact, I had just booked the flights for my trip next year!
Next year, I’m going for a 10-day, Tokyo/Kyoto/Taipei trip. If your first reaction is “Wah, so rich? Two countries!” – hold on for a minute.
With low cost carriers (LCCs), air travel is no longer as expensive as it used to be. Between my wife and I, three pairs of one-way tickets with 20-kg luggage inclusive and extra leg-space (Scoot “stretch” seats are incredible value for money which offer even greater seat pitch than full-fledge flights) on the two longer segments of travel (SIN/NRT, TPE/SIN), they cost a grand total of S$690 per pax – right smack in the middle of super-peak cherry blossom period. Not that bad huh?
Likewise, few months back, I travelled from SG > Bangkok > Phuket > SG. On the Bangkok to Phuket leg, I flew for a mere S$75 which served food and drinks on-board. Why visit only two places when I can do three?
Thinking Forward
Besides saving and investing any spare money that comes into my possession, I have a weird habit of budgeting for a lot of my upcoming expenses. Stuff like expenses for Chinese New Year, income tax (I always make full payment), yearly replacements for glasses, contact lenses and dental checkups etc.
This time round, I have also decided to set aside 18 months worth of premiums for my low-value AIA whole-life policy that is reaching its 20-year mark in June 2017, after which I would be surrendering it.
I’m basically on a mission to lower my monthly cash outflow to the bare minimum. Wish me luck!
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Heya, just wondering why do u want to surrender ur whole life after finishing payment? Was wonderinlg if i should purchase 1 for the after 65 insurance coverage + term.
Think i need to do some budgeting as well. Dollars sitting in my acct without working
Hi JD,
Unfortunately, this isn’t how it goes. It is one of those policies where you basically keep paying – there is no stopping. Long story short – low coverage, poor returns.
Oh I thought it was limited pay whole life policy.
I have one of these too. Is it AIA Prime Life? Bought by your parents? I recently found out I had one! Mine has very low coverage as well. I’m reaching the 19 year mark for premiums paid. Just requested for an in-force benefit illustration and surrender value document.
I’m curious why are you surrendering 18 months later and not now?
Cheers!
Hmm, to be honest I can’t remember the exact name but it is indeed by AIA. Yeah, by parents. I recalled extracting the Post Sales Benefit Illustration a couple of months back and it is one of those whereby the
“maturity”“break-even point” is at 20 years. Is yours the same? The surrender value (non-guaranteed, of course) at 19th and 20th year mark has a huge difference.Hmm, if it isn’t a limited pay policy how come yours has a maturity date? Just curious. Mine is currently approx 25/month for 30k TPD and death benefit. Yours?
I’m unsure of the jump from 19 to 20 years, as I mentioned to my agent that I wanted to cancel it asap, he however advised that the jump in surrender value is higher on year 20. Hence I’m waiting for the current Benefit illustration now to make a decision. I guess that’s exactly what you are doing?
Would you prefer to chat here or? 🙂
LOL – sent ya an email 🙂
Wow, that’s a good deal you have for the Japan trip!
I think I will give YNAB a try.
Hi My Sweet Retirement,
Yeah, I thought so too. I remembered my last trip to Japan on A380 the return tickets were already more than S$700 each! Give the free trial a try – it isn’t necessarily suitable for everyone but many of us swear by its effectiveness.
Hi! The software is even more important for me, because my income is not stable. So it tells me how much I have to reserve for next month. After some time, the tracking becomes such a habit. My wife is adopting the tracking system too ever since she got a smartphone lol
Hi LP!
The amazing thing is that how a piece of software catered to so many different situations all over the world. Happy to know that it worked out well for you.
I totally agree, the manual entries seemed tough initially but it has grown to be a trivial aspect after getting used to it. My wife is also using YNAB after I introduced it to her – that makes both of us really lucky husbands I suppose!
With regards to YNAB, I heard there’s some new YNAB going around with yearly subscription.
Saw on YNAB reddit threads, called nYNAB. Yet to really look into it yet though.
Hi Kevin!
Great post! I was using OCBC’s budgeting webapp, but I decided to go on to purchase YNAB and try it out after reading your post(s) on it. 🙂
Just some questions – this is the first time I am using a full-fledged budgeting software, and the walkthrough was pretty simplistic. Therefore, I would like to seek your advice on how I should set it up.
I have already set my budgets and categories, but I was stumped when it comes to credit card expenses. Do I create a Credit Card budget account, or list it under my main checking account as a category? The same goes for my investing (I transfer a set amount to another account monthly for investing) and house montages.
Which works for you?
Thanks a lot for your help! 🙂
Hi Dan!
Using the comments section probably isn’t the best place for a long discussion so I’ll *try* to keep it short and continue via email if needed. I assume you’re using YNAB4 and not the soft-release/beta YNAB5 (too many unresolved problems in my opinion)
The thing about YNAB4 is that it is very versatile and there are multiple ways of handling your personal finances. The “typical” way to handle a credit card is to create is as a separate account which starts off with a $0 balance. As you charge expenses to it, the credit card account balance becomes negative. You select whichever category the expense is meant for, as per normal. When you make a credit card payment, you simply transfer money from your checking account to your credit card account.
YNAB4 isn’t exactly designed to handle investments and the way I do it is to create a category called Investments, and another off-budget account e.g. StanChart. Every month, I transfer from my savings account to my off-budget StanChart account and tag the category as Investments, which “use up” the money I’ve budgeted for Investments category. This way, I know how much cash I’ve actually put into investments. A separate, standalone portfolio tracker would give you the current value of your investments.
Hope this makes sense!
Thanks Kevin! That helps a lot! I’ve been using it for about 2 weeks now. Really useful in creating that awareness of using my money well! The next step: to create buy-in for the missus! 😀
Now that they have launched nYNAB, I’m not certain whether I should pop over to the new version – Will you?
I was lapping up the information in the support groups for YNAB, and many did talk about the bugs in the beta phase. Not too sure whether these issues are ironed out in the launch version.
Hi Dan,
Good luck with the Missus! I’m running the new YNAB in parallel with the existing one and haven’t quite decided yet on what to do.
Hi Kevin
If you do believe we should be paid weekly, this AWS don’t exist in the first place. It is called annual wage supplement for a reason. For example, people in certain countries are paid weekly. There are 52 weeks. If we are paid monthly, we only get paid for 4 weeks x 12 months = 48 weeks. Therefore, the AWS is to supplement the 4 weeks. Depends on how we “argue” about it. haha.
My annual expenses are fixed beforehand. So, receiving AWS or not is the same to me, except income is higher. 🙂
Hi Frugal Daddy,
Oh wow. I haven’t actually thought of it this way – thanks for pointing it out! I usually read of people in the US being paid once every two weeks but it didn’t occur to me to think of it like that – haha!
Aye aye. Good for you! I’m trying to make my annual expenses as consistent as possible.
Haha my AWS was gone in 60 seconds. Stashed straight into emergency fund.
Haha! Hope you have enjoyed reading your copy of Invest Lah!