BrandArena: Fierce Financial Management for The Year Of The Dragon

Tuesday 24 January 2012

Fierce Financial Management for The Year Of The Dragon

The Chinese New Year brings a few superstitions with it. For one, people start cleaning up their homes prior to the New Year’s eve to rid themselves of any lingering bad luck from last year and to get ready to welcome the brand new year.

One good thing is that you can put your broom down and your feet up after that – Chinese tradition has it that cleaning over the New Year means you'll sweep all o

f your good luck out the front door. It’s also said, that if you start the New Year in the red, you'll finish it the same way. But these customs were developed before we had such convenient tools as Visa debit to help manage our money, so as we enter the Year of the Dragon, mix traditional wisdom with some modern know-how from Visa debit to get your finances in order.

The Dragon

2012 is the Year of the Dragon and that's also your Chinese Zodiac sign if you were born in 1940, 1952, 1964, 1976, 1988 or 2000. The dragon is the symbol of power and wealth but being born in a dragon year is more the financial equivalent of having a strong tail wind. Unless you set your sails right, your dragon status won’t move your financial boat forward. They may be lucky, but people born in the Year of the Dragon still need a good financial management plan if they want to prosper.

The key to spending within your means is to know what your expenses are and to spend less than you make. It sounds simple enough, but so many of us find it hard to stick to! A simple way to start is by creating a realistic budget that you can stick to - whether daily, weekly or monthly – whatever works for you. Now you need to prioritize your outgoings, sorting out the ‘must haves’ from the ‘would likes.’ Do you need that gym membership or could you go for a run? Do you need to have that coffee from a vendor every morning, or could you make your own at home? And be honest with yourself from the start or you’ll only get into difficulties later. Now set yourself goals to achieve throughout the year. You need to think SMART which means setting yourself goals that are: Specific, Measurable, Attainable, Relevant and Time-related.

• SPECIFIC: Be specific on what you want. Avoid just saying “I want to save money”. Instead say “I want to save money to travel to Bali.”
• MEASURABLE: Give your goal a benchmark. For instance traveling to Bali will cost $2,000 and you have $800 already saved, saving the additional $1,200 gives you a measurable goal to reach. Try to break it down to a more manageable goal of $200 per month.
• ATTAINABLE: Make your goal realistic. Saying you want to travel in Indonesia for six months staying only in five star hotels may not be attainable if you've only got $800 to spend on that holiday. Instead think what is within your means, for example, “I am going to save each month so I can visit Bali for three days and stay in a three star hotel."
• RELEVANT: The goals have to make sense to you. It’s not practical to work toward a goal that doesn’t fit your need. For example, if you are going to Bali for your wedding anniversary, you may not want to be staying in hostels and may want to save more for something a bit special.
• TIMELY: Set a definite target date. Set a date for your trip and work towards it.

Now when you are spending throughout the month, remember your budget and each of your goals. If you use a debit card it is easier to spend within your means since each time you spend, the money is drawn directly from your bank account - you buy now, you pay now. Like cash, except that the transactions on your debit card can also be tracked on your card issuer’s website or over the phone and your monthly account statement will provide full details of your purchases, including merchant name, location, date and amount. Keep track of your receipts, check them against your bank statement and make sure they tally with your budget. It pays to be organized!

Lucky Money

At Chinese New Year celebrations, people wear red clothes, decorate their homes and streets with poems on red paper, and give children "lucky money" in red envelopes popularly known as 'ang pows'. Red symbolizes fire, which according to legend can drive away bad luck. This is a great opportunity to start teaching the younger members of your family about the value of money and how to use it responsibly. But it doesn’t have to be a heavy lecture, keep it simple by asking them questions like “what are you planning to do with your money?”, ”will you save any for that computer game or expensive toy you’ve always wanted?” or even “have you thought about giving it to someone more in need than you?”. You can talk to them about how far that money will go. Perhaps when you next go to the supermarket, talk to them about what their money would buy on the shopping list. Games can be powerful teaching tools, so playing ‘pretend shop’ and games involving money is a good way to teach financial literacy. For slightly older children, you can teach them to live within their means by opening a checking account with a debit card. If they are lucky enough to have an allowance, you can help transfer it into their account and through their bank statements you and your child can keep track of what they have been spending. The benefit of holding a debit card is that they can’t ever spend more than what is in the account and you can use it as a tool to sit them down and plan their expenses with them, helping them to budget efficiently and prepare them for financial independence in the future.

Baby boom

It is said that anyone born in the Year of the Dragon will have natural charisma and will be gifted with power and luck - which is why so many parents will be rushing to have children in 2012. In fact, the obstetrics and gynecology department at the Prince of Wales Hospital in Hong Kong says that the birth rate increases by five percent in a dragon year and Raffles Women's Centre in Singapore expects the number of babies nationwide to increase by 10 per cent to 20 per cent in 2012.

So for those who are expecting the pitter patter of tiny feet, it’s definitely time to get your finances in order. Rising costs and inflation aren’t making it any cheaper to raise kids. This includes food, clothing, healthcare, tuitions and items such as prams and cots. So use a budget planner and set yourself those SMART goals early on to ensure you don’t get into any financial difficulties down the line. A good way to spread the cost before your baby arrives is to purchase the essentials over several months. Online shopping is the bargain-hunters best friend. Browse websites from the comfort of your own home and with your budget and debit card in hand you can research and compare the best deals on all the baby essentials you need. Look out for merchants offering free home delivery too. But don’t forget to be safe online.

Look for secure websites that have an address that starts with http"s" for secure. You can also look for a padlock icon in the browser that means your payment information is protected. Some websites will also provide further protection with identity authentication services such as Verified by Visa which requires you to enter a password before you can make a purchase. All you need to do is register your card with the bank which issued your card or during the checkout process at a participating website, and then you’re good to go. Whether you have a new arrival on the way, want to save for a family holiday or simply want to ensure you are spending within your means every month, remember: draw up a budget, set some realistic and motivating goals and be a savvy shopper.

So Gong Xi Fa Cai from Visa Debit - may the New Year bring you much health, wealth and happiness!

By Brian McGrory, Head, Consumer Debit Products – Asia Pacific, Central Europe, Middle East and Africa, Visa

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