Wednesday, June 10, 2020

Holistic Approach to Financial Planning with DBS NAV Planner

If I were to throw a question to the audience on how many that have religiously tracked their spending in the last one year, the number would not have been significant. 

The main reason for this is budgeting and tracking our expenses are a hassle. If anyone has found it challenging to stick to a budget, you are not alone. 

According to the research study by Business Insider conducted last year just before the Covid, half of all Singaporeans do not stash at least 6 months’ worth of emergency funds. One in five does not even have 1-month worth of expenses in savings. 

This is a staggering growing concern for many Singaporeans who have to cope with the increasing cost of living, living day to day without a plan. 

One main reason for this is that most people do not bother to plan for rainy days and when an unprecedented crisis like Covid hits the shore, it’s too late to make adjustments to the lifestyle. 

My Story: 

When I first started working years back, I started tracking all my incoming income and outgoing expenses in an excel spreadsheet. 
It takes a lot of effort to update the spreadsheet every single day to ensure that my cash balances in the bank reconcile back to the amount of expenses spent and incoming receipts. 

While I am an accountant by profession and this is typically what I have been doing for my corporate accounts (even so, we have started to automate the reconciliation), it still feels like a lot of work to me when I get home to do one for myself. 

Not only do I have to get the reconciliation to balance, but I have also categorized each expense to prepare a schedule. For example, under my Non-Discretionary segment, I categorize my expenses to include mortgage and maintenance, groceries, transportation, utilities, etc. 

After a while, I decided to forgo the schedule due to too much effort and I switched to rely on the budgeting tools from my bank account which tracked my receipt and expenses accordingly.

Introducing DBS' NAV Planner























Clicking on the legend on the right will bring you to an analysis. Forgive the alarming figures, I'll get on this later!

NAV Planner is a new digital advisory and budgeting tool that helps its customers consolidate and analyse their overall financial spending patterns through the financial information that flows in and out of their bank accounts.

The current version is an upgraded version of the previous DBS GPS tool launched in 2018 where it focused more on financial streams.

Apart from being able to track spending, which is always important, this time round, the launch will revolve around three rings (see below):
  • Savings (Light Orange) 
  • Insurance (Dark Orange) 
  • Investments (Red and pink) 
That said, I’ll talk about just three of my favourite features: Money in Money Out, Investments and Emergency Savings.

The Expected: Money In Money Out






What I like about NAV Planner as a budgeting tool is that there’s automatic categorization so I know exactly what I’m spending on. There are several broad, catch-all categories that are generally quite accurate.

(In the event you don’t agree with the classification you can always change it, and they will remember future transactions!)

One quick look, and you’ll get a rough idea of where your money flowed out to this month. Even if you’re the compulsive sort who ENJOYs inputting data into spreadsheets, you have to admit this is useful for quickly identifying any red flags in expenditure.

Really Neat: Emergency Savings




Okay, here is when it gets cool.

Based on what I’ve been spending for the past six months, NAV will also be able advice if the current savings are able to meet the next few months of disbursement.

For instance, if you spent an average of $3,000 a month but only have $9,000 in the bank, they’ll be able to tell you that you only have three months of emergency savings, which is below the recommended six.

In case you’re wondering why my NAV planner says I only have 0.5 months of spending, it’s because my monthly expenditure for the last six months averaged around $160k due to a combination of renovation and other investments.

With my current cash savings as $80,000, they've calculated that this amount can only last a month!


Nice to have: Investment Overview



Keeping track of your investments is hard. Especially if you're a prolific investor. NAV is trying to change that.

If your investment is in digiPortfolio, the NAV Planner would also track the net asset market value of your investments and embed them into your overall financial plans.

You can also manually add non-DBS assets so it captures those investments as well (yes, it’s tedious the first and only time you do it, but it’s a small price to pay for the convenience for having a consolidated view of your investments).

In the future, DBS says you’ll be able to add individual equities to the mix.

So if you’ve 50 shares of say, TSLA, you’ll be able to view them with prices updated daily.

Finally, for newbie investors who are new to investing, DBS also gives you some tips to start investing, whether it is through Unit Trusts or ETFs.

Of course, if you’re an active investor like me, it might not be that relevant. But hey, it’s important that people get started!

Conclusion:

In times such as COVID-19 when we are working harder and rest is in short supply (ironically due to WFH), this is a welcome departure from hours spent on spreadsheets and budgeting apps of the past. 

The NAV Planner is more than a budgeting tool. It’s an all-round financial dashboard that allows you to see each aspect of your finances holistically from savings to investments to expenditure. 

It also lets you have a bird eye view from the top to see how much cashflow that goes in and out every month so that you can make better forecasting decisions. 

When you see how all the pieces come together, it’s so much easier to navigate your life better. 

If you’ve been putting off financial planning, now you really have no excuse.

Disclaimer: This is a collaboration article with DBS on the navigation of DBS NAV but all opinions stated are purely mine and vetted. 

Thanks for reading.

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10 comments:

  1. How many months of spending will it save?

    ReplyDelete
    Replies
    1. Hi

      I believe it will track your historical expenses for quite a while but it means you will have to manually input them first if you want to do so historically.

      Delete
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