Personal Finance 101
Asked on 13 Feb 2020
It is not saving money, not having the right knowledge or just no discipline?
I would say it is discipline.
If you are disciplined, you will set aside time to learn.
You will budget cashflow to invest.
You will set aside time to plan, monitor and review
It is the follow through that is lacking. There is no better example than myself. I really should have started earlier, but honestly, I didn't. I was late to the market during the recovery from 2009 GFC. Even though I didn't have much capital then, but I could have done something at least.
I would say mindset? Singaporeans are ingrained to get a degree, get a good job and work to death. Few would actually venture into different paths to realise their dreams, and when they realise they are not happy, they often feel it's too late to do sth about their life/finances, so they become more unhappy. It's a vicious cycle.
LOVE THIS QUESTION.
I would say the biggest challenge is no discipline, as it just underlies the first two factors you mention.
I liken achieving financial fitness goals to physical fitness goals, and here's why:
1. Both require time
Just as you don't get physically fit and limber in just a day (or even a month), it's the same with your finances. Good things take time (as with compound interest). ;)
2. Both require self-discipline
Just as how your abs don't just show up by sitting there, it also takes self-discipline to educate oneself, and also self-restraint to not be reckless with money.
3. Both require patience
It takes patience and sticking to the course. Just as how it's probably not wise to pop a pill that promises you a greek god physique, it's also wise not to go for get-rich-quick schemes.
I feel that it is the external stimulus.
Afterall, there is only so much willpower available to handle the opposing factions.
Benchmarking against the wrong group of people? (who is the idol to mirror? A super saver, such as freegan, or investor. Even by investor, which form of investment and which idol?)
Afraid to go against society's norm?
A classic example can be something like "Payday is today. Let's treat ourselves well and Jiak Hor Liao/pamper ourselves or it's a norm to go overseas once a year by plane." Nothing wrong with travelling by plane or pamper ourselves, but is that what we really want, or what we are conditioned to think that is what we want?
I have taken time over the past 4 years to learn, read and seek for advice from different FA/FCs. Started doing Some investments in blue chips, SSB, bonds,SRS and VCs for CPF. My biggest challenge is that I am unable to see a blueprint of my investments and my insurance policies to stack up towards my financial goal. any Suggestions on how you would make it work or resources to learn how to have a holistic review and chart forward.
Do not have the motivation or direction to the financial well-being.
For example, most of the ppl do not know how much they need to retire, hence they just work and spend without any goal in mind.
Once u know the amount, u will able to calculate backwards the amount u need to save or invest from now, then u will be motivated to execute it.
The biggest challenge i feel is inertia.
The inertia of starting a high-interest savings account, the inertia to find out about insurance needs, the inertia to research on what is needed for investment.
All these takes time, and by then you will probably waste some years in your life.
To start small, is a big step!
Discipline and mindset in all aspects.
People always say, no time, no money, don't know how. But they always do not take action on how to have time, have money and learn how to.
I believe it's important to have a strategy / game plan, and stick to it for the long term. Don't beto affected by the noises in the market and let your emotions get the better of you.
The biggest challenge is people do not see the long term benefits. in this fast paced society, people only look at short term gains, they do not know about delayed gratification.
I would say #1 is running away / escaping and not willing or dare to try to confront and face up to the numbers.
Most people would want to brush it away and probably hide in bed than try to see where they are... Because most would sense that they have some sort of issue, and its very uncomfortable to have to think / worry about it.
It's quite like asking your parents to go for a health check. They don't really want to know if they have problems.....
There are quite some things to realize:
#1 be as debt-free as can be. be cautious even with 'tax-efficient' investment plans (like mortages etc), think about what you really need, material goods (as opposed to social wellbeing, friends etc) rarely give deep&longstanding satisfaction. spend a bit for your private luxuries, but not too much.
#2 I apologize in advance, sorry but: in the first place mistrust your formal advisors of big financial institutions (banks, insurances). today it is obvious that for decades these institutions sold overpriced and/or risky products (mutual funds, life insurances, unnecessary insurances, incomprehensible structured products) to retail investors and most often biased to recommend their own inhouse products when there were better alternatives. f.ex. cheap index ETFs have brought here a lot of change already and led the big mutual fund houses even to call up some emergency meeting in NYC seeing their income drifting away
#3 when investing into equity, make prudent choices and have patience: focus on large, cheap index ETFs instead of single stocks, options, bonds etc. Then follow always a Buy & Hold strategy (= ultra longterm). Never panic and sell when there is a market crash, most crashes recovered completely in a matter of 2-3 (sometimes ca 5) years, you should invest money into equity anyway only when you can put these funds away for at least 5, better still more than 10 years
#4 independent financial advisors could be of value (as can be Seedly), but I feel it could be difficult to find a really independent one
#5 for getting knowledge read, read, read
more on my thinking here:
Lack of discipline and focus.
Lack of knowledge can be resolved by reading the right materials or to seek the right mentorship.
Lack of savings can be resolved by understanding our cashflow and to create a budget that works.
More about Understanding Cashflow: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/
More about creating a Budget: https://www.blog.pzl.sg/how-to-create-a-monthly-budget/
The lack of discipline or focus means that one will simply be devoured by any temptation.
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