After graduating from university, it was only then I understood the importance of financial literacy. I recalled there was a student-interest club present that to promote financial literacy amongst undergraduates. Back then, I did not even know what financial literacy was. Looking back, my university had many resources to help students prepare for life after graduation.
I witnessed how friends who had lack of financial literacy and discipline make so many money-related mistakes, especially making poor spending decisions. I knew someone who managed to incur a five-figure expenditure in a month when she earns less than half that amount. You cannot spend more than your take-home salary without going into debt – something which seems like common sense but not very common after all.
I was born into an average family. Both my parents were from Malaysia – my mother came to Singapore to study, and my father came to work. Essentially, they both came and built their lives here from scratch. My parents have always been frugal. They never splurged or treated themselves or my siblings to anything exorbitant. They always emphasised the importance of saving money since I was young.
Parents play an essential role in shaping our views, habits, and attitude with money. With my parents’ influence, I did not have zero knowledge of financial literacy and had some basic money saving skills I recalled how, at the end of every Chinese New Year. I had to ‘surrender’ all the money I collected from red packets to my father, who will bank them into my savings account. I was pretty upset about it as I was still a kid and wanted to spend them on something I wanted like many of my friends. Little did I know that this was the concept of the Time Value of Money – the money earned used to save and invest will be worth much more in the future.
As a Christian, I started learning from the biblical view on money. Some of the well-known bible verses about money would include:
Matthew 6:24 ‘No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money.’
Mark 4:19 ‘but the worries of this life, the deceitfulness of wealth and the desires for other things come in and choke the word, making it unfruitful.’
In other words, the bible teaches us that we should not chase after worldly desires like money. Chasing after these material possessions will not give you a fruitful life. After all, you cannot bring the money you have on earth into your grave. I learnt the importance of finding your passions and what is essential in your life, not being blinded by money.
When I got my first full-time job, my starting salary was less than what I expected (The best remote job to increase your income). With the bit of take-home salary that I have, I wanted to learn how to make my money work harder. This mindset got me started to learn about insurance savings accounts, robo-advisers and investment. I found out how I could accumulate my wealth to ease into retirement comfortably in forty years.
2. Money Practices
I picked up some money practices and habits from family, friends, mentors, and even the Internet throughout the years, other than knowing how to budget better and save money:
Firstly, buy necessary insurance that covers critical illnesses, hospitalisation, etc. Getting your insurance covered is part of being a responsible adult where you don’t have to worry the people around you.
Next, set aside some spare cash in a high-interest rate savings account, which you might need in case of emergencies. Many people recommend setting aside around six months’ worth of your expenses. Some even recommend setting aside a years’ worth of expenses, especially if you do not have a stable source of income.
Thirdly, grow your hard-earned money modestly. Hard-earned money is money that you earn from your full-time job and your side hustles as well as life savings. I don’t make risky and volatile investments with them as I don’t have that much spare cash yet and can’t bear the thought of losing them in the near term. With the low-interest rates for all bank savings account, I only put money that I set aside for monthly spending and emergencies with the bank. I have explored parking my spare cash in insurance savings accounts and cash management accounts. Currently, I have placed a portion of my extra money in a bonds portfolio as it is a more stable asset class and somewhat protected from market volatility. As I wanted to enjoy higher returns than what cash management accounts could offer, such a move in my portfolio required a little more risk. I still have a portion of my spare cash in a cash management account, where I deposit most of my salary every month after accounting for bills and expenses.
Indeed, money is essential. We need to spend wisely, save consistently, and invest regularly. As much as money is necessary, we need to prioritise other aspects of our lives like happiness, family, and relationships with people. We should never betray our values and morals for the sake of it. Solely going after money is the cause of greed. Being too greedy will eventually betray you. In Singapore, many can get caught up in chasing after the quintessential ‘ Five Cs’: cash, credit card, car, condominium and country club. Being part of Generation Z, I don’t think most of us subscribe to this idea. Besides the importance of cash, I believe in becoming more cultured through travelling the world and establishing a promising career.
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