Money Management Tips for the Self-Employed

About 15% of Singapore’s workforce is self-employed, which comes to more than 300,000 people. Traditional financial advice doesn’t work for people working for themselves, a considerable fraction of the population. Employed people often do not have to manage things like health insurance, Medicare, and retirement savings on their own.

If you are setting up your own business, consider getting a small business loan from a licensed moneylender. If you’re in a fix on how to manage finances being self-employed, read the following tips.

Set up a basic budget

It is hard to predict a reasonable, fixed income when you’re self-employed. In this case, determine a minimum amount of money required for subsistence. This will include housing, food, utilities, and other important expenses. Frugality is essential in the initial months, and one must keep their spending minimal.

Think percentages and not dollars

In the first few months, your income will fluctuate often. Allocating a specific amount of money to your retirement account or emergency fund is erroneous. It will result in saving too little in high-profit months and too much in low-income ones. Designate your income to three important heads—taxes, emergency savings, and retirement. Set aside 10% every month for the emergency fund, regardless of income.

Create an emergency fund

One can never stress enough on creating an emergency fund, and it is even more important for the self-employed. The objective of an emergency fund should be to provide financial cover for at least 3-6 months. Remember to use the emergency fund as a last resort. In case of a minor emergency, consider getting a personal loan from a moneylender.

Use better financial months to compensate

There will be months where you will double, or even triple, your average income. Keeping this in mind, many financial experts suggest what is called giving yourself a salary. Dedicate whatever percentages have been decided to taxes and other funds to their accounts, pay yourself your salary, and put the rest in an overhead account.

Make taxes a priority

The old axiom of paying yourself first is redundant in the case of self-employed individuals. While those employed and with a steady salary have their taxes usually withheld, you will have to pay yours yourself. If you fail to set aside tax money, you could face massive unanticipated tax debts. To avoid underestimating what you owe, set around 35-40% of your returns for taxes.

Use the moneylender smartly

Proving credit worthiness while you are self-employed may not be easy at the beginning. Some experts say that paying your credit card bills on time to bolster your financial responsibility. However, reliance on credit card purchases is not ideal for the self-employed. Borrowing from a licensed moneylender is possible even with a weak credit score. Moneylenders also offer flexible payment terms.

Think twice before automating bill payments

When it comes to working for an employer, bills should be automated to avoid mounting of debts. However, the self-employed generally do not have a payday. Instead, whenever a payment comes in, divert pre-decided percentages to taxes, bills and the emergency fund. It is a good idea to have multiple accounts, even though the proposition of a single savings account may sound simpler.

from Financial Directory Singapore

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Common Misconceptions about Payday Loans

Payday loans have a bad name, not for the way in which they are taken but for the manner in which they are to be repaid. As a result, people tend to avoid them even when in dire need of immediate cash. It is important to clear the air about some of these misconceptions and provide the right picture so as to motivate people to approach registered moneylenders for these quick and easy loans. We make an attempt here.

What are Payday Loans?

Simply put, payday loans are by far the most easily available short term loans you can lay hands on. They are especially handy during emergencies like sudden illnesses or any other kind of family crisis. All you need are age proof documents stating you are an adult and a proof of identity. You also need to find a trustworthy and registered moneylender who can be approached for a payday loan.

There are fewer rejections and borrowers do not need to go through lengthy proceedings for availing the loan. Cash disbursal is quick too.

Payday Loan Myths Busted

There are common myths concerning payday loans. Here are some common ones;

The Annual Rates of Interest is Very High

Paydays are not meant for annual repayment. Their standard payback term is for two weeks. Extrapolating the rate of payback to a year is only colluding facts! The annual interest rates will only be applicable when the loan is rolled 26 times over for a yearly payback! And this is an unlikely situation in most cases. When you pay back the loan on time, the charges are perfectly affordable.

You will need Excellent Credit Ratings

The truth, however, is that there are moneylenders who do not check your credit ratings before offering a short term loan to you. These loans are both for good and bad credit scores. In fact, one of the primary reasons paydays are so popular is because credit ratings are not taken into consideration.

Opting for a Payday Loan will lead to Bankruptcy

Paydays have nothing to do with bankruptcy. You become bankrupt only when you are unable to manage your finances in a proper manner. Most people believe that since these short term loans have monthly payback cycles, not being able to pay up each month will lead to mounting of debts. However, it all depends on planning a schedule for paybacks. You need to have a disciplined payback schedule and stick to it in order to avoid getting into a debt trap.

Getting a Payday Loan will Adversely Impact Credit Score

Most lenders do not report to any credit agency. So this might be working in your favor. However, if you do not payback on time, then your case will be reported to a collecting agency and hence your credit score will be affected. At the end of the day, it is all about how responsible you are as a borrower.

Payday loans can prove to be a great help during times of need. A responsible approach is all that is needed for keeping all worries at bay.

from Financial Directory Singapore

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Ways to Grow Your Money in Singapore

Saving money is not enough in a rapidly progressing metropolitan world city like Singapore.  Growing money is a financial imperative, which can be done by building sources of passive income, or setting up a retirement fund.

There are plenty of investment routes in Singapore, but choosing the right ones is important. For instance, you can borrow money for setting up a small business from a moneylender, or even invest in the Straits Time Index. Here are some ways to grow money in Singapore.

Getting out of debt

When it comes to growing money, carrying debt is like moving in the opposite direction. Before you can begin saving, debt in all forms—credit card bills, overdrafts, and loans—needs to be paid off. The right way to do it is by debt consolidation with help of a licensed moneylender.

Personal loans from banks need a robust credit score, which isn’t a necessity with a moneylender. You get the cash quick, which paves the way for renewed wealth growth.

Investing in basic financial products

For best ROI, you should invest for a long term and choose simple, cheap products. Simple investments are run by artificial programs that track stock market indices. ETFs are a perfect investment route for those who want potentially higher returns and are prepared for variable returns.


Before running to the moneylender, conduct enough research on where it would be the most profitable to invest. With the oil and gas industry in an unfavorable state as it is, it is a good idea to consider blue-chip stocks through REITs or the STI ETF.


Remember that with high returns, comes high risk. However, they protect investors from default company risk, providing better claims than stocks. You can go for funds like the Singapore Savings Bonds, which offer around 2.5% p.a.

Gold ETF

One of the most common ways of investing in gold in Singapore is gold ETF. In gold ETFs, you don’t need to own gold to have investment exposure to it.

Renting out your property

Prices of landed property in Singapore in 2016 fell by 4.4%, and the trend is here to stay. Even otherwise, renting out property is a common passive income route in Singapore. If you are currently living in your only owned property, and need a little more money to buy another apartment, get a personal loan from a moneylender.

Investing in annuities

Another traditional wealth-building method, annuities can ensure a fixed passive income. However, for the best results, invest in annuities early on in life. Annuities are the perfect solution for those not very well-versed with investing. However, guard against surrendering the policy to avoid losing your savings.

Paying off mortgage early

Ask any expert on ways for tax-efficient investment options, and the answer you will get is paying off mortgage early. Overpaying by even small margins on a monthly basis can help save significant amounts of money, considerably shortening the tenure of the loan.

Your personal financial advisor may not recommend this option, but may ask you to consider investing in insurance products. Do not take it seriously because they stand to make money from successfully recommending insurance.


from Financial Directory Singapore

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Questions to Ask Yourself before You Decide to Borrow

The recent regulations regarding caps on monthly late fees and interest rates have made borrowing from a moneylender in Singapore easier. That said, borrowers still need to consider how the loan will affect their finances in the future.

One does not have to abstain from borrowing. Paying your debts on time can boost your credit rating and help with debt consolidation. Practical borrowing also includes knowing where to buy from, for instance, a moneylender can give you instant money. To know what questions to ask yourself before you decide to borrow, read on.

Why am I really taking this loan?

The answer to this question depends on a number of other minor questions. The purchase you want to make might not be that necessary after all. It makes much more sense to save up money and make your purchase later. You will also have to ask yourself whether you can buy something that is cheaper instead. However, if the money borrowed helps your business to grow, it is a good idea to go ahead with the loan.

Will I be able to qualify for the loan?

Applying for a loan at a bank without the required credit rating can hurt your credit score. Debtors who have been turned down in the past look like bad risk. However, the same is not true for licensed moneylenders, with whom credit rating is not a primary requirement. The right thing to do is to ask financial institutions about their minimum lending requirements.

Will I have the liquidity that I want?

This will depend on the EIR (Effective Interest Rate) that you get. There are a number of ways to calculate liquidity, which reflects the actual cost of a loan. Loans that are to be repaid over frequent small installments, offer less liquidity. It is always better to settle for lesser installments, though of higher amounts.

What is a good amount to borrow?

Before approaching your moneylender, you must know the actual amount of cash you require. To calculate this amount, create a cash-flow projection. If your clients pay you in 2 months, but you need to pay your vendors twice a month, extra money will be required.  It doesn’t reflect well on you to be unaware of the cash you need.

Will I be able to make the payments?

You should not have to suffer a cash crunch for the entire duration of the loan to be able to repay it. The loan may put a serious tab on any current expenses you might be used to. You will not be able to go on as many vacations. There could even be phases when you regret the purchase and miss payments. Do not let your debt-to-income ratio exceed 25%.

Preparing yourself to borrow money doesn’t end here. You will have to arrange the necessary documentation as well. Unlicensed financial institutions may resort to unlawful means and this could inflict undue hardship on your family. On that account, borrowing from a licensed moneylender is a much better option. The loan is granted fast and repayment is flexible.


from Financial Directory Singapore

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New Measures to Curb Abuses by Licensed Moneylenders: Part Two

The first part of this article series touched upon two fraudulent practices by licensed moneylenders in Singapore and how The Registry of Moneylenders responded to those in their newly issued guidelines. There are two more practices that drew attention of the registrar. And they addressed those issues as well in their new guidelines. In this article, we take a look at the next two money lending practices in question.

The next two practices in question

As a potential borrower, you should be aware of the following deceptive practices by any moneylenders in Singapore.

Offering re-loans to borrowers already struggling to pay off their existing debts

Some lenders provide loans or re-loans to borrowers, who are already in debts. That way, they repeatedly charge a 10 percent administrative fee to the borrower. On the other hand, the borrower pays an amount every month, but it does not help repay the original loan amount and the interest, because the monthly amount collected from them goes into paying administrative fees, late fees, etc. If someone continues to pay administrative fees on re-loans instead of repaying the original loan – their total payment to the lender could exceed the principal loan amount after some time. Still, the debt on the borrower would remain the same.

Registrar’s Directions – The registrar clearly advised against granting any loans or re-loans to borrowers, who are already in debts. Any such act of lending would be considered a violation of the 11, 12 and 12A of the Moneylenders Rules, says the new guidelines. This could even result in cancellation of the moneylender’s license under section 7(1)(d)(v) or under section 9(1)(a)(iv) of the Moneylenders Act.

Splitting a single loan into several small loans to earn more late fees

Steps have been taken against this fraudulent practice as well. Some lenders split a single loan into multiple components. When the borrower fails to repay on time, the lender would impose a late fee of $60 on each component or split loan. That way, they earn more on late fees.

Registrar’s Directions – Under the new guidelines by The Registry of Moneylenders, licensed lenders have been advised not to split a loan, especially when they know that the borrower could fail to repay on time. If a lender splits a loan with the purpose of earning more late fees, it could result in cancellation of the lender’s license under section 9(1)(a)(iv) of the Moneylenders Act. The registrar may also refuse to renew the lender’s license under section 7(1)(d)(v) of the Moneylenders Act.

It is also a responsibility of the lender to make sure that the borrower reads and understands the rules about short-term loans and split loans. Failure to inform the borrower is also considered an offence under sections 19(1) and 19(2) of the Moneylenders Act. Before granting a loan, the lender must provide a written cautionary statement to the borrower. The cautionary statement must be written in a language that the borrower understands. The borrower must read and understand all the terms and conditions and must acknowledge that with a signature.


To read our previous article, please click here.

from Financial Directory Singapore

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New Measures to Curb Abuses by Licensed Moneylenders: Part One

The Registry of Moneylenders recently took note of some fraudulent practices by licensed lenders in Singapore, and consequently issued a new set of directions aimed at curbing the abuses. Mainly four types of abuses have been reported, and steps have been taken to address each type. This article series aim to make borrowers aware of the fraudulent practices and the actions taken to curb them.

The Practices in question

If you have borrowed or planning to borrow from a licensed lender in Singapore, be wary of the following deceptive practices by the moneylender.

Offering weekly loans by falsely informing borrowers about a ‘new’ law

Some lenders may trick you into believing that there is a ‘new’ law that allows them to offer you weekly loans.

Registrar’s Directions – This is completely wrong. There is no such law, confirms The Registry of Moneylenders. In fact, any attempt to entice a borrower or offer them weekly loans by falsely saying about the so-called ‘new’ law, is a serious offence under section 27(a) of the Moneylenders Act, says The Registry of Moneylenders. If you fall prey to any such attempts or even know someone who is trying to manipulate the system in that way, you should report to the Registry of Moneylenders immediately.

Offering short-term loans with a repayment period of less than one month

If a licensed lender offers you a short-term loan of less than one month duration, be aware! The original intention behind offering you a short-term loan could be to roll over the existing loan repeatedly. They will refinance or renew your existing loan again and again, and will charge you a 10 percent administrative fee every time. Despite you paying an amount every month, your loan or interest will remain unpaid.

Registrar’s Directions: The Registry of Moneylenders warned the licensees to refrain from offering short-term loans to a borrower, when they suspect that the borrower may not be able to repay the principle loan amount, and as a result, may have to pay an administrative fee again and again, which would not help reduce the principle amount owed. The registrar has also suggested that the lender should check the borrower’s current income source and liabilities before granting a loan. The lender should not approve a loan application until they get satisfactory income proof from the applicant. For instance, if the borrower’s currently monthly income is less than the amount he is planning to borrow, the lender should decline the loan application.

The onus is on the borrower too. They should not accept a short-term loan, without knowing the repayment terms in details. The licensed moneylender should inform the borrower about the risks associated with non-payment or delay in payment. This should be done in writing, meaning the lender has to provide the borrower a written statement of caution, before granting the loan. A sample cautionary statement is available on the official website of The Registry of Moneylenders.

As a borrower, you should read and understand the guidelines, terms and conditions clearly before taking up a loan. Stay tuned for the next part of this article, where you’ll get to know about the other directions issued by the registrar.


To read our previous article, please click here.

from Financial Directory Singapore

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