My teenage daughters can’t wait to start work so that they can earn their own money and buy whatever they want! I can’t wait for them to start work so that the financial weight of funding their education is off my shoulders! But wait a minute!
High up in their agenda is to spend on whatever they want! That’s the danger sign!
Most young adults when given their first pay cheques would most probably go on a buying spree. With so much cash in hand, they will be very tempted to buy that iPhone 4, buy that dream car, eat at fine dining restaurants, go for multiple holiday trips in a year. They are free to spend whatever they fancy.
They have never been taught financial planning in school and most parents are not sure how to educate their children in this area because their parents did not teach them either.
Here’s my advice for you, if you have just joined the Singapore work force.
1) Save first, then spend the balance. Not spend first and save whatever is left at the end of the month. How much to save? 50% of what you earn is a good figure to start. Why? Because you are still staying with your parents, you do not need to pay for the utilities and other family expenses. 50% of your salary can go into your bank savings account, start an regular investment savings plan, buy an endowment policy which can be a short term or long term savings plan. Delay gratification is the first discipline you must master here.
Do not be tempted by quick rich schemes or “no money down” investments. If you don’t understand fully what you are getting into, stay out of it because most likely you will not even know it when you have lost all your money! Be prudent and patient when it comes to investments. Keep at least 6 months of your expenses in the bank and invest the rest using the other ways mentioned above. Yoour financial planner can calculate exactly how much you should save per month to achieve your wealth accumulation goals.
2) Protect the most important factor in your income producing model – YOU! Your ability to generate an income is the most vital component of your wealth accumulation plan. You must create the foundation of your financial plan, that is your wealth protection, that is your life insurance policies. You must cover premature death, total and permanent disability, critical illness and disability income. There are many insurance products out there, so getting an independent financial adviser will help you get the best value for your money. Don’t buy from your friend who joined an insurance company just to help him out. You will be paying the premiums for the next 10 to 25 years, so it is very important that you are not over paying for your insurance policies.
3) If you already have a boy friend or girl friend, who is also working, you must instill this financial planning mindset in that person so that both of you will not quarrel or separate because of financial issues. Most couples split because of financial problem. One save while the other spend. Different value sysytems will create havoc in your relationship.
4) Don’t sign up too many credit cards, two cards are enough for most people. You have to keep track of your credit spending. Pay off your credit card bills every month, don’t ever roll over and pay the minimum. If you have done that, quickly pay it off now! Credit cards are for convenience, don’t buy the product if you can’t afford it now. Many adults have fallen into this trap and have declared bankrupt. It is not a joke to be declared a bankrupt. Your bad record will follow you for life.
If you need consultant to help you design a financial plan, just make an appointment with us one of these days.
065-63738797
No comments:
Post a Comment