As housing prices and cost of living increase at an alarming rate in Singapore, many Singaporeans are regretting some of the financial decisions they made (or fail to do) earlier on in their life.
While it may be too late for some of them already, it is still not beyond some of us to take action to salvage our financial situation.
Like a quote I always like to repeat:
‘A wise man learns from his mistakes, but the wiser man learns from the mistakes of others.’
I hope that you will also join me in my quest to be the wiser in this example.
1) You didn’t start saving in your 20s thinking that your salary will increase in future
The most dangerous lies are not the outright ones that are obvious to identify, but the half truths that are deceptively camouflaged as facts. This is one of the most dangerous beliefs that have claimed many victims to date.
Well, it is true that your salary will increase. However, what you are more likely to forget is that expenses will increase in future as well.
As you grow older and “upgrade” your standard of living, you also have to welcome the arrival of a child (or two), start paying for your house and perhaps even a car as well.
With all of the above expenses coming into the picture, your increase in salary might not equate to a proportionate increase in savings. In fact, you might even find your savings percentage dropping!
Solution: Start saving now while you’re still young. Young people have the least amount of expenses and that presents you with a great opportunity to accumulate your wealth quickly – you’re never going to find another stage of your life where your expenses are going to stay this low again.
2) You didn’t buy the proper insurance required and then fell sick after
When we are younger, one of the things we constantly overestimate is our health and our inability to fall sick. Ask any older person you know who have less than perfect health and you would always hear the same thing – “I should have bought better health coverage when I was younger.”
Given our Singaporean diet and the urban lifestyle, the risk of high cholesterol and high blood pressure is never too far off the average man’s health report.
The truth is that some of us are lucky that we can still buy insurance after falling sick. However, the unfortunate thing is that the coverage has either been reduced or the premium would have had some extra charges added onto them.
Solution: Buy insurance while you’re still young and health. You get the full coverage and besides, it’s cheaper too!
3) You didn’t start investing early enough and missed out on the power of compounding returns
If you had attended any investment talks or seminars, one common response you will often get it from attendees is that they should have bought XYZ stock sooner and sat on the XXX% returns that they would have received.
Most people don’t invest early because they aren’t familiar with investing. They put it off until they finally acknowledge the need to invest in the face of rising cost.
Even after admitting their regrettably late response, they insist on taking the lazy way out by going for seminars with the intention of finding stock recommendations and broker tips instead of learning the proper art of investing. As a result, they often end up losing more money than they make and give up on investing altogether.
Solution: It’s alright if you don’t know how to invest. No one taught us about investments when we were schooling. However, it’s not alright if you remain ignorant about investing.
Don’t be lazy. Go for classes and seminars that teach you how to invest, instead of telling you what to buy. Don’t be put off by the prices, because the price of ignorance is going to cost you much more!
4) You didn’t expect your credit card debts to skyrocket so quickly
Just as how most people fail to understand how compounding your investment returns can easily triple or quadruple your savings, they also fail to grasp how quickly a compounding interest rate can land you in massive debt.
Solution: If you use a credit card, keep track of your credit card spending and ALWAYS pay it off it in full. If you find all of that too much hassle, then I would advise you to skip the credit card altogether.