Regret Earlier Than Later

Into my 40s, I am halfway through living. If the average life expectancy of an average Singaporean Joe is 83, I have exactly 40 years left. Take out the last 5 years if I am torment by illnesses and unable to get off the bed for a simple walk to the nearby coffeeshop, I will have 35 years left to live. If I continue to work into the age of 63 years old (by the nation's standard), I need to live for another 15 years while I am physically capable and retired with no monthly income. 15 years of not working with no stream of income sounds pretty scary to me especially if I am living in one of the most expensive cities in the world. Income refers to money received through 1) work or 2) investment. Technically speaking if I am physically capable and work into my late 60s, keeping up with tabs should not be a problem but hey... life at old age is not about working. Like everyone else, I would like to retire as early as possible and still be able to enjoy my life after I have stopped working. "Enjoy" in this case does not mean big spending but enjoy spending time on doing the things I like, for example watching a Netflix marathon without any social considerations, playing mobile games or "PlayStation 30" all day long without worrying about the next meal. But does no work means no money? Not exactly... however, if by not working means not generating a source of income then investment would be the next absolute solution. 

DON'T BE LIKE ME

Honestly, my working life has been pretty smooth sailing. I have a group of very capable people who have assisted me at work, generating income for the company over the last 13 years. Do not be mistaken, I do not sloth around and have worked hard during the early days of business. I remembered working as early at 7 am all the way into the night till 9 pm. 12 hours work shift during the first few years of my business was almost inevitable. Back in those days when I was young and furious, nothing at work was in my way. I could eat, sleep, talk and work all day long. Everyday was about working long hours to generate income. Did I make a lot of money? Hell yes! However, it was not all glitter, many sacrifices were made, family time especially but hey "no pain, no gain". But only if there was a way to undo all that.

Those days, I did not have time for anything, I was exchanging my time for money. I worked hard but I did not work smart. Thinking back, this was not very smart. If hard work translates into money, there are more hardworking people out there and I am definitely not one of them.

As the nature of my work was labour intensive, everyday, I would went home tired and late. I dragged my feet to work the following day and everyday was a repetition of yesterday. I just did not stop working as I knew that if I had contributed the hours, it would translate into higher income. I worked 7 days a week, 365 days a year. There was no time to stop thinking "smart" as money was rolling into the bank. Which is the start of a bigger problem...

With all the money, all I did was to save them in the bank (now this is a big mistake which I will explain why). When I had a "cheat" day from work, I would spent the money to make up for the lost in social life. Eating good food (one of my worst temptations till today) and spending on quick travels were second nature to my lifestyle. As soon as I am off work, it was spending, spending and more spending. I did not realize that with passing years and the way that I was spending, I was doing more harm than good to myself in later years. Instead of getting the money to work for me, I was literally working for the money! I spent them whenever I can and that is a big mistake.

Do not get me wrong, it is not wrong to spend the money you earn. Life is about enjoying the little pleasures and joy while working towards fulfilling material needs to balance the mental mindset as a form of self reward. However, spending without thinking could definitely need better management. I was literally digging into my savings to fulfil the material needs and work even harder to earn more money to spend them even faster. It was a revolving cycle?

TIME MACHINE

PAY YOURSELF FIRST

If there is a time machine, these are probably the things that I would changed. Firstly, I should have been more open in taking charge of my own finances. Keeping your money with the bank is not wrong. It is a secure place which keeps your money securely and if you ever need them, it can always be withdrawn and you can use it almost immediately. As simple as going to an ATM to withdraw your money, it is instant cash. Having instant cash puts the mind in a comfort zone. You might not need it now but when you do, you know it is accessible. Having instant cash on hand provides liquidity and helps to overcome unexpected happenings such as the loss of job, retrenchment, medical bills... one has to keep some money aside for emergency. A good recommendation would be to allocate at least 4 - 6 months of income as "emergency funds". What if you do not even have enough for an emergency fund? Many people that I know hardly have any extra dough towards the end of the month as they will wait for their next pay cheque and start the spending routine again and again. The first step is to understand this term "Pay Yourself First". Paying yourself does not mean paying your monthly bills. Paying yourself refers to setting aside a portion of the money for yourself. This can be done using a separate account from your salary account. Every month, you will pay yourself first as soon as your salary is banked in by your employer. Depending on your income, start to pay yourself a portion of your salary and watch it grow. Make it a habit and set aside this money. If you are currently without an emergency fund, start with a small amount and work on it progressively.

WHEN SAVING SUCKS

I am not against banks but they are literally "vampires". For the record, I keep a portion of my money in the bank as well. Banks are smart, they will take your deposit and pay you between 0.2% - 1% of interest and loan out your money as loans for personal, businesses and mortgages with an even higher interest to others. Well, that's just how a bank works... they use your money for their best interest (pun intended). In a nutshell, banks are empty shelled offices which facilitate the transaction of money from one hand to another. Through these transactions, the bank takes a cut every time money changes hand. If they make "their" money work for them, you too should make your money work. How can you do it? You can do it through many ways, the safe way is to earn pathetic interest that can never beat inflation. Inflation is another story on its own but in simple terms, it means that a cup of coffee that I bought in the 80s is more pricy at present. The house that your parents bought donkey years ago is almost out of reach for anyone who has just started working. To beat inflation with pathetic interest is going to a nuclear war using bows and arrows. You can never win the war! According to Google, over the last 20 years inflation in Singapore reached 36%. For every dollar spent 20 years ago, you are now paying $0.36 more. Using numbers closer to heart would meant that for every $100 spent 20 years ago, you need to spend $136 now. Every $1000 spent, you need to spent $1360. Every $10000 spent, you need to spent $13600! You get the idea...

Now that you understand about the need to pay yourself first and inflation... can you do anything about it? Do not be like me. For most part of my life, I saved my money in the bank like everyone else. To me, that was a safe haven, it was safe until my savings got depleted through spending and inflation. To most people, taking your money out from the bank is always not a good sign. Withdrawing your money out makes it seemed like you are losing money from the safe haven. The truth is, even if you do not withdraw your money, it is going to lose out to inflation in years to come. What is your next step?

Well, that is where investment comes in... I will take you through my investment journey from knowing nothing to setting up an investment account and how to get everything started for yourself in my next post.

There is a common saying when one regretted his/her choices made years ago... "If only I knew..." Now that you are aware, are you taking any action? A thought will always be a thought until it turns into action.

About The Contributor

Ben is not financially trained. He is not a certified financial planner and he does not sell any insurance or investment plans. He is not financially motivated by any entities to produce this blog. He just want his friends to know more about money management and not have anyone fall between the social cracks. Nope, he is not a millionaire though he aims to be financially free before 50 years old.