First of all, I do not claim that all my finances are under control. At certain times, it can get wild and it can get out of hand. What I have noticed though, is that as I become more aware of my financial situation, I begin to have a better control over it.
Some years ago, I had started like everyone else, fresh out of university, landed myself in a job which paid relatively well given the economic situation then. I then got myself a credit card and then, the problems began. I was spending more than I was earning and I was a very good customer of the bank.
Despite knowing that it is not wise spending future money, I turned a deaf ear, saying instead that I am still young and money will not be a problem (I was optimistic that my job will still be there for me tomorrow). By then end of the first week, I was already looking forward to the last week of the month where the salary will come in.
One day, my situation hit me - OMG!! What am I doing?? I am in my late 20’s and I do not have any decent savings and besides some pathetic insurance policies, I do not have any savings nor investments. My constant excuse was that the cost of living was too high, I need to buy these things etc. I was denying that I was actually living in a dangerous turf. If I lost my job, I will not be able to sustain.
Admiting that I had a personal finance problem was a major FIRST step for me. I had to have the will to WANT a change in my current situation but I just did not have the knowledge to overcome it.
SECONDLY, I had to put in some action. Through much reading, I was able to make some sense of how to go about getting myself out of this situation. The saying “It is not about how much you earn, but how much you save” made sense to me. I started to put aside a small amount every month till I reached the minimum amount required to place a time deposit (TD). THIRDLY, I started to set goals about how many TDs I want to place by when and how much. I also had a set of broader financials goals I wanted to achieve - short terms goals (car, investment), mid term goals (insurance, house), long term goals (retirement).
All this time, I struggled to keep my expenses under control. Seeing my savings grow further motivated me to cut my expenses. NEXT, I read up on portfolio diversification - its pros and cons. I read that I should be having about 6 months of my monthly income saved for rainy days. It never reached there because I then diverted my savings into Unit Trusts (UT) funds. I then decided to give a good balance to it and took up some insurance policies. I thought about the consequences of not having the means to pay for my medical bills and having my family bear it for me. Here, I think I could have bitten more than I could chew because my premiums were killing me at one point in time and I started to regret it.
This is where my FIFTH point comes in - perseverance. When goals are set, it has to be constantly updated to suit our life stage. And when we believe that the goals are correctly set, we should just stick to it, no matter what. Our financial goals need to be realistic, our commitment to the portfolio needs to be realistic, else, we will easily give up.
Today, I am happy to say that my expenses are no longer more than my income. I have a dedicated pool of money channeled to savings, investments and insurance every month. The phrase “Too much month at the end of the money” still holds true for me sometimes, but it is more of an exception rather than the norm. Although I have cut back on my spend, I still manage to splurge on my family and myself once in a while. More importantly, I am no longer desparate for the month end to come and I could enjoy my life more.
LASTLY, it does not matter how much you earn, save, invest or insure if you do not protect it. Therefore, remember to have an estate planning session to ensure that your wealth (no matter how small it is) is being protected for the sake of your loved ones.
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