SINGAPORE – We are familiar with the refrain: “Money is not enough.” Yet, its meaning depends entirely on how well you manage your spending.
It is easy to choose a desired lifestyle, but what is not so simple is to ensure you have the ability to pay for all your expenses.
Young working professionals feel this first-hand when they may overspend due to their YOLO (you only live once) mindset. So they find themselves justifying these discretionary expenses as needs.
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Taking private-hire rides instead of public transport because they are running late or want to avoid crowds.
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Splurging on premium wellness activities like aerial yoga, reformer pilates or high-intensity training packages.
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Going for an overseas retreat every quarter to cope with burnout.
As these working professionals transition into their next life stage as working couples, a new set of financial priorities emerges because they now need more to run their own households.
An overseas wedding can set one back by quite a bit. At the same time, couples have to pay for their Build-To-Order (BTO) flat or condominium, fund costly renovations, and budget for the costs of starting a family and caring for elderly parents.
By the time they reach mid-career, many professionals continue to grapple with the twin challenges of caring for children and elderly parents.
Costs could mount as expenditure on their children and parents goes up. As if this is not stressful enough, there is always the threat of losing a job as companies worldwide look at ways to shed costs.
With so many competing financial commitments, it is no wonder money constantly feels insufficient.
The good news is that while you cannot dictate how much you can earn, you can certainly help yourself by looking at how you spend your money.
This financial discipline is crucial because, even with careful planning and smart choices, an individual will still have to supplement their income from work with a loan at major life milestones.
For instance, buying a home is too big-ticket an expenditure to pay upfront. Many would need to take a mortgage to fund their home purchase. Some also take out loans to cover their home renovations.
Borrowing can easily get out of hand. A homeowner, who chalked up almost $96,000 in loans and credit card debts to renovate his four-room BTO, recently shared with me how he regretted spending so much on his home.
He realised in hindsight that he was chasing his idea of a perfect home and overstretching his finances.
Credit cards are another form of debt that could easily snowball out of control.
Most of us use credit cards to earn air miles or cashback.
But here is the catch – we must remember to pay our credit card bills on time.
Otherwise, the amount we owe can balloon quickly, given that credit cards charge some of the highest interest rates – more than 25 per cent and calculated daily – among all forms of debt.
A financial adviser shared a case of a couple in their 60s who chalked up a staggering $600,000 in credit card debt just to send their three children to study overseas.
They wanted the best for their children, but they ended up compromising their own retirement as they will need to continue working to pay off this debt.
How do we manage our borrowings wisely and avoid falling into a debt spiral?
This goes back to the concept of making smart spending decisions. Ultimately, we need to spend and borrow wisely.
You can learn practical tips to navigate these complex decisions at The Straits Times InvestMe workshop on Sept 17.
I will be moderating a panel comprising Tan Huey Min, general manager of Credit Counselling Singapore, and Leon Loh, financial services consultant at GEN Financial Advisory, who will share tips on how to manage your household budgets.
Do not miss out on this InvestMe event, which will be held at the SPH Media auditorium at News Centre in Toa Payoh North.
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To sign up for the course, subscribe to The Straits Times InvestMe package. Existing subscribers can sign up without incurring extra charges if they have not committed to a fresh subscription plan recently.
