Most People In Our Current Generation Are Really Spendthrift. Sometimes It Feels Like What's On The Outside Is Worth Way More Than What's On The Inside. Branded Goods Everywhere. Not Like It Matters Because Did You Earn It? Or Did Your Parents Bought It For You? If Your Parents Did Earn It Then Do Know That Your Outfit Just Depicts Your Parents Sweat And Perspiration, Not Yours. You Earned It? Of Course You Have The Right To Spend And I Have NO Right To Stop You. How Long Did It Took? Is The Image You Are Portraying Worth The Effort? If You Are Making Tonnes Of $$$ Then Maybe This Would Be A Small Issue, But If You Are Not Spending Within Your Means Then You Better Think Twice.
So What Is Financial Planning About? In My Definition, It Is About Managing Your Expenses Based On The Income/Allowance You Have And Plan For The Future. Do You Want To Get Married? Do You Want To Start A Family? Do You Intend To Start A Business? All This Requires $$$.
Financial Planning Revolves Around $$$ But Do Note That $$$ Isn't Always A Need.
Food Is. Water Is. Oxygen Is.
Most People Have The Misconception That $$$ Is Everything When $$$ Is In Fact Just A Medium Of Exchange. A Good Example Of When $$$ Would Be Useless Would Be In Times Of War. I'm Pretty Sure One Would Be Willing To Offer You All Their $$$ If You Can Offer Them Food. Another Example Would Be When You Have Your Own Farm Or You Are Capable Of Manufacturing Or Producing Your Own Needs. To Put It Simply, If You Are Capable Of Self Sustaining, $$$ Is Worthless.
Not Able To Do So? This Is When The Need To Work Comes In. You Work, You Get Paid And With This Amount Of $$$, You Buy Goods And Services. Most People Think That The Pay They Get Is What They Have Earned. The Truth Is, You Only Earn A Dollar If You Save It. If You Spend It, It's Gone. If You Save It, It's Still There. It Can Shelter You On A Rainy Day. It Can Multiply. And Last But Not Least, It's Still Yours. Keep It. It'll Come In Handy Some Day.
Saving Isn't Really That Difficult. The Trick To Doing So Is To SAVE FIRST BEFORE YOU EVEN START SPENDING! Try It. It's So Much Easier. The Rational Behind Starting When You're Young Is To Benefit From The Compounding Effect. A Dollar Saved Today, 10 Years Down The Road Could Be $1.10. And It Grows Even More As Time Passes. Does Not Seem Significant In The Short Run But Definitely Has A Huge Impact When You Are About To Retire.
I'll Give A Simple Illustration Of How I Save-Up Since I'm Managing My Own Expenses Right Now. (You Can Make Use Of Apps To Keep Track Of Your Daily Spending)
Current Allowance : $40 Per Working Day
Total : About $840 Per Month.
Transport Expenses : $51 Per Month (Bus & Train Concession)
Target Saving : $550
Remaining Amount : $239
Average : About $10
Assumption : I Have My Meals At Home On Weekends And I Don't Spend $$$ On Entertainment.
OR
Average : $9
Entertainment : $25
Assumption : I Have My Meals At Home On Weekends
Possible? Yes.
Percentage Of Savings On Total Salary = 65.5%. If Assuming I Have To Spend On Weekend Groceries As Well, I Would Still Have Over 50% Of Savings.
So It All Comes Down To The Ultimate Question: Why Save? Everyone Has Different Reasons As To Why They Should Save, But I Will Give The Most General Reasons.
The 3 Most Important Things That An Ordinary Person Should And Would Consider About In Their Future.
1) Buying A House
Property Prices Have Been Falling Ever Since The Cooling Measures Have Been Implemented But They Are Still High. And You'll Never Know When Prices Of Properties Could Sky Rocket Again. Expect To Pay Installments Your Entire Lifetime If You Don't Start Learning How To Save. The Longer You Take To Pay Off The Installments, The More Interest You Are Paying. $$$ Down The Drain. Plan Properly And I'm Sure You Can Get To Pay Off Installments In Probably 20-30 Years.
2) Starting A Family
Have You Ever Thought Of Having Kids? If No Then Congrats. You Have Saved Yourself A Huge Sum Of $$$. Just Know That When You Grow Old, There Won't Be Anyone To Take Care Of You. If Yes, Then You Better Start Planning. From Diapers And Milk Powder To Food, Education And Daily Necessities, Be Prepared To Folk Out A Huge Sum. So, If You Don't Plan, Don't Pray For $$$ To Drop Down From The Sky~
3) Getting Insurance Coverage
This Is The Most Important Of All. Putting Your Money Into Insurance Is As Good As 'Saving' Your $$$ For A Rainy Day. It Is A Must To Have Protection Unless You Are Telling Me That You Can See The Future And You Can Expect When Something Bad Is Going To Happen To You. If You Can, Do Help Me See Mine Too. I'm Really Interested To Know My Future. If You Can't Then DON'T EVER SAVE THIS $$$.
And One Important Thing That We Should All Start As Soon As We Can If We Haven't Already Done So..
Investing.
Start Learning How To Invest Every Single Dollar You Have. Regardless Of Whether It Is Investing In Stocks, Bonds And/Or Even Exchange Traded Funds (ETFs), Just Invest. If You Are Not A Risk Taker, It Is Highly Advised That You Put Your Money Into Bonds And A Highly Recommended Bond To Take Up Is The Singapore Government Savings Bond (SGS). Absolutely RISK-FREE And You Can Take Your Money Out At Any Time Without A Penalty On The Interest You Earn. It Will Launched In The Second Half Of This Year.
Do Find Out More Here If You Are Interested:
http://www.mas.gov.sg/~/media/resource/news_room/press_releases/2015/Factsheet%20Savings%20Bonds
If You Have A Bigger Risk Appetite, Do Consider Investing In ETFs Or Blue Chips/REITs. ETFs Have Dollar Averaging Cost Effects. Basically You Invest A Fixed Sum Every Month To Buy A Certain Stock Or A Portfolio Regardless Of The Price. The Longer You Invest, The Lower The Risk. As For Blue Chips/REITs, They Are Generally Of Lower Risk And Have High Dividend Yields.
Whatever You Do, It's Always Better Than Parking Your Money In The Bank. Inflation Is At Around 3% And Even Though Interest Rates Are On The Rise At The Moment, The Current Consumer Floating Interest Rates Is Still Pathetic (Not Even 0.5%) This Just Means Your Money Parked In The Bank Is 'Shrinking'.
Looking At The Long Run Is Key To Securing A Smooth And Bright Future.
Good Luck And All The Best!
Note: Do Share With Your Friends If You Find This Post Interesting And Helpful. Feel Free To Tweet Me Or Message Me (If You Know Me Personally) If You Got Any Clarifications.
No comments:
Post a Comment