Money management can be daunting for many during this ongoing pandemic. With emerging economic developments, the higher cost of living and increased competition, it is now imperative to ensure an adequate budget.

On Money and Me, Michelle Martin spoke to Willis Lau, Financial Advisor and TikToker, about how Millennials can better understand their financial plans and develop an optimistic attitude towards investing and saving.

Michelle Martin: You are always sharing tips on your TikTok channel. So how about you share some of these for the millennials. Do you have any money management tips for them?

Willis Lau: First of all, it is important to understand the overall picture of money management. So, in essence, it’s about understanding what a financial plan means. When people talk about money, they often tend to associate it with getting insurance, a savings account, or just an investment, for example. But there is actually a lot more to it than that.

Tip # 1: Think about spending wisely on this question: How can we spend effectively?
I think it’s a lot easier to work on than to save and invest. So think about the credit cards you can use and the payment platforms you can combine them with to get rewards, discounts or even cashback, for example.

Tip # 2: Find the best places to keep your emergency funds
Next, I think most of us would have set aside some emergency funds – which are parked in a savings account with a decent interest rate.

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But with what happened [the pandemic], I think many of these sentences have been revised. Now it is important to look where you can still park your money so that it is not consumed by the current low interest rates.

In short, with funds that we don’t actually use, but instead make available for emergencies, we should look for platforms that offer a reasonable return. In general, these platforms can be high yield bank accounts, cash management accounts, or even short term foundations.

Michelle: When it comes to creating a financial plan, do you sure have some good hacks for us?

Willis:
Hack # 1: Understand and Manage Your Cash Flow Well
The first would be to understand your cash flow – your “ins” and “outs” – that are related to your budgeting and spending. At the end of each month, ask yourself the question: is my net cash flow positive or negative? Ideally, it should be positive.

But I also understand that there may be big things going on in a few months, like a wedding or maybe a renovation. If there’s a reason to justify the cost, that’s fine. But in general we need healthy cash flow.

And I’ve also seen people take out personal loans just to pay off those large sums of money. That brings me to my next point, namely planning ahead for such big ticket items. The interests [from the loans] are pretty high so you want to make sure your money is well spent.

ALSO READ: How To Start Managing And Investing Your Money

Hack # 2: Build Your Emergency Fund – Now would be good
Second, we need to talk about emergency funds. Have at least six to twelve months of cash so that you can still do the things you want in the event of a crisis. For those who haven’t started yet, it would be great to put some cash aside for these funds.

With that in mind, we can also start building a safety net and this is where insurance comes in. Understand what type of policy will suit you best and most importantly, figure out the essentials that you need to get started.

Because you don’t want to overstrain those long-term commitments. And yes, a critical health condition would be at the top.

Listen to the full podcast on Awedio: SPH’s Free Digital Audio Streaming Service to find out which different platforms Willis Lau parked his emergency funds on.

Download the podcast.

This article was first published in MONEY FM 89.3.

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