Monday, June 7, 2010

It's a jungle out there

Many Singaporeans are surviving from paycheck to paycheck, thinking they will keep their jobs and lifestyles. When they get a windfall from government GST refund or an inheritance, they are back to Orchard to spend it as fast as they can. If the sole breadwinner is out of job for 3 months, will the family car be repossessed? If he is still jobless after 6 months, the home mortgage will be in jeopardy.

The odds of winning the next TOTO or 4D are going to be so low that you will probably not able to win. However, in your lifetime, you are able to earn a small fortune. How much did you spend? Singaporeans are having higher income than ever before, but it brings along high mortgage balance, high credit card debt balances. If this is happening to you, you are running with the wrong crowd. It’s not what you earn that counts, it is what you keep after spending, inflation, and taxes.

Too many people assume the bills will somehow get paid, their child will receive financial aid for poly or university, or CPF will foot the bill for a comfortable retirement.

Are you better or worse off for your financial shape than you were five years ago? Are your assets or debts increasing? Which is growing faster? Are there any plans to protect you from losing 4% or more of your take home pay due to inflation? What are your contingency plans if your company bankrupt? Who will be bringing home food if you fall off the stairs next weekend, become disabled, and lose your earning ability?

Start to pay yourself first. It can be as little as $50 a month and it can accumulate into a tidy lump sum in a few years. This concept of paying yourself first has made more people millionaires than people winning TOTO or selling hot stock options. If you still believe you cannot afford to save, ask yourself, if your parents were starving, could you afford to buy $50 worth of food a month for them? Of course you can. Are you not as valuable? Sign up for an automatic payroll savings deduction, because if you don’t see the extra savings, you wouldn’t be tempted to spend it.

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