Young S’poreans Explain Why It’s Important To Have Financial Goals In Your 20s – Mothership.SG

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Financial planning is not a sexy subject.

After all, for most of us here, spending money is much more worthwhile than saving money.

However, this lack of planning could be problematic, as a survey found that two-thirds of working Singaporeans and permanent residents (PRs) do not have enough savings to last longer than six months.

What does it mean? This means that for many of us, losing our jobs will be a big blow, as we may not have enough money to last until we find a new job.

After all, another study showed that 64 percent of workers who experienced a drop in income had less than three months of emergency funds, and 27 percent of workers had less than a month.

In the middle of the uncertainty of the Covid-19 pandemic, these concerns are very real.

To learn more about how to better manage finances, Mothership spoke to several young Singaporeans about their habits for saving money for the future.

Have financial goals

Quick question: How many of you have a real goal you’re saving for? If you don’t, it might be a good idea to have one.

Having a goal in mind can help keep you from indulging in various desires and motivate you to invest in your savings instead.

Andrew (pseudonym), 30, who works as a customer service manager, has goals that mirror those of many Singaporeans.

He wants to save enough money for his marriage and his first home in the short term, and also set aside some money to support the education of his future children.

For some people, saving for these big goals can be a daunting task, as each one can easily cost hundreds of thousands of dollars.

For Belle (pseudonym), 25, who works in a public relations agency, all it takes is saving enough money to own a cat and a dog, and enough money to travel (when the border restrictions will be lifted), that’s good enough for her as a short-term goal.

In the long run, Belle will also need to save up for Singaporean basics, like a wedding and a BTO apartment.

Since a 4-bedroom BTO apartment would typically cost at least S$300,000, with a down payment of S$30,000 or more (depending on her choice of bank loan or HDB), it is important for her to start planning her finances early.

With these big commitments that could be daunting to save for in the long run, Belle’s short-term goal of saving enough money to care for her pets serves as a way to motivate herself on her financial journey.

As the saying goes, you can’t run until you can walk, so if you’re new to financial planning, having a short-term goal like Belle might be a good start.

Track your expenses

Pop quiz: do you know exactly how much you spent last month?

If you don’t, you probably haven’t kept tabs on your spending habits and you could be prone to lifestyle inflation.

After all, you can make a million dollars a month, but if you spend more than that, you’ll always end up broke.

In general, it is a good idea for you to set a budget for your main expenses and to ensure that you do so.

For example, for Charles (pseudonym), 39, who is a software developer, about a quarter of his monthly salary goes to investments and savings, the rest goes to his expenses.

He confessed that he doesn’t really watch his actual spending, given that his spending habits are relatively static, consisting mostly of car expenses and necessities for his two children.

Not tracking expenses can be quite common after all, if you’re busy taking care of your family, like Charles, the last thing on your mind would be how much you spent on coffee last month.

However, this may not be ideal, as you may find that you have spent a lot more money than originally planned.

For example, you may occasionally feel the need to splurge on treats for your kids, but without knowing how much you’ve spent, you might find yourself spending too much in the long run.

And if your spending is of a more fluid nature and you enjoy hanging out with friends, keeping an eye on your spending can be a prudent decision.

There’s no point in making sure you eat S$2.50 worth of cai fan every working day for lunch in your quest for savings, only to then spontaneously spend S$300 drinking with friends on the weekends.

Know how much you save and invest

So you have your goal in mind and now you start tracking your monthly expenses.

The next step is to have a clear idea of ​​where your assets and liabilities are.

As you get older, you are likely to take on more liabilities, such as home loans and car loans.

This is on top of any debts you may still be paying off, such as your student loans, which can further complicate your situation.

When you’re 35, you can earn a lot more than when you graduated, which might sound great.

However, if you find yourself struggling with outstanding loans and your salary increase does not exceed the increase in your debts, then you could be worse off than your 25-year-old self.

In order not to receive a rude shock somewhere down the road, you should always keep a close eye on what you owe and what you own, to get a clearer picture of your financial situation.

Consider using SGFinDex

To make your life easier, there are many free apps or platforms that you can use.

Belle uses a free app to track her expenses. Although the app has fairly simple functions, it allows her to review her expenses every month, so that she knows what expenses she can reduce, in order to reach her goals.

For Andrew, he uses a more old-school method, manually recording his various assets and liabilities.

Although the methods mentioned above are commonly used, there is actually a better solution.

For those of you who have multiple credit cards and multiple bank accounts and want a more transparent method, like Charles, you might consider using SGFinDex, which allows you to track all your finances and view them in one page via Banks and MyMoneySense.

This is what you will see in your SGFinDex dashboard. Picture via MyMoneySense.

This means that if you have savings accounts with DBS and OCBC, fixed deposits with Maybank, mutual funds with Standard Chartered, home loans with UOB, while holding credit cards with Citi and HSBC, you no longer need to connect to different banks. apps or websites to view your balances and bills.

With SGFinDex, you will be able to view your CPF account balances, income, and HDB loan amount and installments, making it very easy to view your finances in one place to better plan for the future.

Say goodbye to individually checking your different bank balances. Picture via MyMoneySense.

Have all your finances at your fingertips. Picture via MyMoneySense.

There are currently seven participating banks powered by SGFinDex: Citibank, DBS/POSB, HSBC, Maybank, OCBC, Standard Chartered Bank and UOB.

In addition to being able to consult the data of the participating banks, you will be able to access your financial data from SGX Central Depository (CDP), CPF, HDB and IRAS too.

You can access SGFinDex via MyMoneySense or the banks aboveand their respective platforms.

Note that the consents granted to these platforms to access your financial data are valid for one year and when they expire, you can choose to renew your consent. During this one-year period, you can also revoke your consent at any time.

Think of it as a financial manager, allowing you to have a better understanding of your finances, but which you can access 24/7, and for free. Learn more here.

Sounds good to me.

Top image via Unsplash.

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