What difference would it have made if you knew these things back when you were 18?
The magical age of 18 is when you’re probably the most carefree, because it’s when you feel you’re pretty invincible and live life a day at a time. There’s nothing wrong with that — after all, you’re only young once, and it’s true that you really do have very little to worry about.
But it wouldn’t hurt to squeeze in a bit of planning for your finances, with one eye fixed on the future. As with most things that involve hindsight, you probably won’t truly realise the value of the following until you’ve chalked up a couple more years.
Start Saving Early
This is the kind of old adage that parents the world over have been preaching forever — because it’s true. So yes, once you start working, even at a part-time job, you should cultivate the habit of setting aside 30 per cent of your monthly salary.
Saving will stand you in good stead when it comes to settling the down payment of your first home, paying for your future wedding (if ever), building your nest egg, and even buying your first car.
Setting aside 30 per cent may seem like a lot when your job pays you by the hour, but bear in mind that’s the ideal, so even saving less than that beats frittering away your entire paycheck.
Build up the habit now, so that when you finally enter the workforce and earn a respectable salary, saving 30% (or more) would become second nature to you. The cost of living rarely goes down, and Singapore is already a pretty expensive city. What do you think it will be like in 10 years?
Okay, so now you know it’s important to save, but do you know about strategic saving? For example, it’s not strategic to park your money in a savings account and do little else, because regular interest rates are really low (less than 1 per cent).
Instead, you should constantly do your research on what the different banks offer to get the most bang for your buck.
You could consider a multiplier account, where you get preferential rates if you do the majority of your banking with a specific bank. Or, when you’ve managed to accumulate a lump sum, try using a fixed deposit account, which gives you higher interest rates as long as you leave the money in there for a specific duration.
When you’re ready to invest, you can take baby steps and explore low-risk options like blue chip stocks and government bonds. But this means you should put in some effort now to bone up on investment knowledge.
Growing up in the social media age means having access to plenty of easy-to-read articles containing bite-sized info (like this one!), so start reading up during the commute to work, rather than stalking the office cutie on Instagram.
Get Serious About Insurance
It’s hard to see the value of insurance when you’re feeling like nothing will ever get you down at 18. But bad things can and do happen; you just never know if they’re going to happen to you.
At the very least, you should consider health, critical illness, accident and life insurance plans. The good thing about starting young is that the premiums you have to pay are much lower. Since you’re likely to be in good health, it means you won’t have pre-existing conditions that will limit the kind of plans you can get.
Insurance is an absolute necessity in Singapore, where medical costs can be shockingly high. Again, this is the kind of thing you only realise when you’ve lived some years, and (inevitably) experience loved ones falling ill and undergoing expensive treatments.
You Don’t Need Much Expensive Stuff
Once we’ve built up some decent savings, many of us will want to experience the thrill of purchasing that first branded item — a chic Bottega wallet, a classic Chanel handbag, a timeless Rolex… While some folks may beg to differ, the truth is you really don’t need a ton of pricey items to be happy.
Of course, buying yourself an expensive item (or two) makes the heart sing. And of course, it’s your money and you can spend it however you like.
But frequently splurging on items that can cost more than half of your monthly salary is simply not worth it in the long run, especially if they don’t have longevity, i.e. you’re guaranteed never to carry the same bag for a good long time.
If you think about how much money you’ve spent over the years, you’ll realise the return on your investment is very low indeed.
Invest In Yourself
And speaking of investments, investing doesn’t just mean in a financial context. You also have to invest in your personal value to the workforce.
This means thinking about the long-term viability of whatever academic course you’re thinking of pursuing. Don’t pick a career only because it seems like a ton of fun.
Take for example, journalism — a career that’s close to this writer’s heart. Naysayers are quick to point out that traditional journalism is a sunset industry, so if you’re thinking of going down this path, walk in with your eyes open.
Make yourself as versatile as possible, so that you can not only write, but have a good grasp of digital communications like photography, video and social media.
It’s the same with almost any career; make sure you understand the industry, whether it can last or will it give way to automation, and be quick to adapt to rapid changes, so that you’ll never end up obsolete (and will always enjoy a decent paycheck).
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By Alexa Fang
Alexa is a pop-culture vulture. She lives to read, write and travel, and decided long ago that life is stranger than fiction. When she’s having croissant, she thinks in French. “31 Rue Cambon” is her favourite address, and she believes that money one enjoyed spending is never money wasted.