BARBADOS DEFENCE FORCE’S
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FINANCIAL TIPS
FINANCIAL PLANNING PREPARES YOU FOR THE FUTURE
...building the kind of security you want, to enable you to a ord the lifestyle you want...
To plan successfully, you also have to consider the present, including the financial choices you are making now.
Otherwise, it is too easy to find yourself making random decisions that would not help but prevent you from achieving your goals.
FINANCIAL PLANNING IS ACTIVE. IT REQUIRES MONITORING AND RE-EVALUATION
Consider if you have: Adequate Protection: This speaks to an assessment of how to protect a household from unforeseen risks. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract. Figuring out how much insurance to get, at the most ‘value for your money’ requires careful consideration.
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Law enforcement personnel require favourable or/specialised insurance policies.
All Barbados Defence Force (BDF) full-time and reserve personnel are eligible to enrol in the Group Insurance Plan
When you save, you want to protect your assets and ensure you will have enough money to cover your financial emergencies.
To receive the best saving options, compare savings accounts across various legitimate banks and further compare to Credit Unions.
Most Banks and Credit Unions pay li le interest on savings so placing your money so this will not magically work to increase wealth.
How Much Money Should You Save?
One of the most widely used rules is that you should save at least 10% of your income. This 10% rule applies to creating a savings cushion for unexpected expenses, education, trade skill or other goals.
When it comes to how much you should save for retirement. Younger people who have more time to save should strive for a minimum of 10%, although the closer you are to retirement, you may be shooting for 20-30% depending on your current nest egg/savings.
Investing means you have to be willing to accept risk; facing the potential loss of some of your assets (e.g money), to achieve the results you seek. You cannot start the practice of investment without being able to save first.
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Step 1. Recognise the financial responsibilities that you currently face, and those you are likely to encounter in the future. For example; any debt you have or you have assumed to help a family member and potential if your home/ vehicle needs repairs.
Step 2. Educate yourself about investing. The more you know about selecting investments, the easier managing your finances reaching your goals will be.
Some will be short-term goals, like buying a new car, making a down payment on a home, or starting a new business. Others are mid-term goals, like financing your children’s education, paying for extended travel, or home renovations. Finally, there are long-term goals (most notably) planning for a comfortable retirement. If you are having trouble ge ing started, you might want to consider the slow and steady approach.
Financial Rules of Thumb 5
Everyone has a unique situation, and there are no concrete financial numbers that define success, but there are some rules of thumb that can help you gauge your progress. While following these rules would not guarantee success, they will put you on the right track.
How much Debt Should You Have?
Ideally, no debt would be the best answer, but you have to realise that for some assets it is almost required you borrow money, such as buying a house. Most experts agree that your total monthly debt payment should not exceed 36% of your gross monthly income.
This is a good starting point, and over time if you can reduce that number you will be in pre y good shape.
Buying a Home?
You should start by calculating your debt to income ratio using the 36% guideline for the sum of your monthly debts. After subtracting your other debt, you are left with a monthly payment that should be appropriate.
Although another rule of thumb for housing is that, you should buy a house that costs no more than two and half to three times your annual income;
for example, if you and your partner together earn $45,000 per year, you should not spend more than $90,000-$135,000 on a home. Note due to rise in cost this example is not always applicable to everyone.
Other factors play a part in the total amount that a person/household can qualify for when applying for a mortgage to purchase a home such as: retirement age, previous savings, inheritances etc. Credit Unions application process may entail less red tape to obtain a mortgage for its members, once they have the requisite deposit in shares.
Their interest rates are normally higher than banks and they may have a maximum on the mortgage amount even though there is excess of the required deposit in shares. On the other hand, banks have more red tape based on your salary and time to retirement; which determines the cap on your loan amount.
How Big Should Your Emergency Fund Be? An emergency fund is to cover expenses when there is a sudden loss of income or other financial emergency. Most experts suggest a household have between three and six months’ worth of expenses available in the event of an emergency. If your monthly obligations total $2,000 you should try to keep between $6,000 and $12,000 in your emergency fund.
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Being Financial Aware
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It is important that as you embark on being financially healthy you do not succumb to “get rich” schemes. Recently a ention has been focused on two types of such schemes: A Pyramid Scheme/ Blessing Circle/ Loom and Predatory Loaning.
Pyramid Scheme/ Blessing Circle/ Loom
These unethical and fraudulent financial practices are presenting a real and present threat in Barbados. Pyramid schemes are illegal. The Barbados Consumer Protection Act CAP.326D Section 23, states: “A person shall not promote or operate a pyramid selling scheme.”
What constitutes pyramid selling? According to the Act, it is a scheme that…financial rewards of many of the participants are dependent on the recruitment of additional participants.
Predatory Loaning
Predatory lending is any lending practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions for a loan that a borrower doesn't need, doesn't want or can't a ord.
Predatory lenders target people who need immediate cash for emergencies such as paying medical bills, making a home repair or car payment. These lenders also target borrowers with credit problems; which could disqualify them from conventional loans or lines of credit.
ADVANCED SAVING STRATEGY
SAVING MONEY IS EASY!
There are only two ways to do it: spend less or make more, or a combination of the two.
Everyone has their favourite way to save including limiting meals at restaurants, or perhaps riding a bike to work. !
Example of Annual Salary Savings for BDF Personnel