Frugal people get a bad name in Singapore. Apparently, not buying designer handbags or spending a day’s wages on a restaurant meal means you’re not living life to the fullest. Admitting you actually have a decent amount of savings makes you look like Scrooge McDuck, a miser who pinches pennies just so he can dive into his vault of gold coins.
Well, if you have no end goal in sight, it’s obvious that you’re going to find it hard to motivate yourself to save and invest your cash. Having a vague desire to “save money” just because you don’t like the feeling of having an empty bank account is not going to cut it, and if that’s all you’ve got, the temptation to buy that handbag or splurge on that restaurant meal is going to win every time.
Here are three long-term goals you might want to co-opt in order to bring meaning to all that saving and investing.
Singaporeans work hard for their money—in terms of time spent, we perhaps work more than any other citizens in the world. That’s why early retirement is just so attractive—the long hours many people work here aren’t sustainable as you get older.
If you don’t envision yourself working that intensely when you’re older, it’s important to start preparing for retirement early. Saving and investing early, even if you don’t earn that much, and not inflating your lifestyle so you can retire on a smaller nest egg, are the keys to an early retirement.
Those gunning for early retirement know that spending less today means stopping work earlier tomorrow. It’s in your best interests not only to earn as much as you can, but also to keep your lifestyle as simple as possible. The less you spend today, the less you’ll need to retire. On the other hand, if you’re the kind of person who needs to spend $10,000 every month to survive, you’re going to have to build up a huge retirement nest egg in order to stop working.
Okay, so maybe you with distaste upon retirees as wizened old people who spend all their time staring into space in void decks or watching Channel 8 dramas, and vow that’s never going to be you. No, you want to keep “being useful” by working all your life.
That’s all well and good, but there’s a big difference between continuing to work past retirement age, and being forced to work because you need the money.
A 2014 survey found that three quarters of Singaporeans viewed their jobs as nothing more than a way to put food on the table. Singaporeans consistently do poorly in surveys measuring engagement at work and job satisfaction. Clearly, given their attitudes at work, Singaporeans would stand to benefit most from attaining financial independence.
Attaining financial independence means generating an income that can cover all your spending needs. (Two of the most common ways to achieve financial independence are by renting out property or investing in dividend yielding stocks.) You’re then free to work for extra cash or to add to your income-generating assets, but you don’t have to. The magic is that you’re less likely to remain in a job you hate when you’ve gained financial independence.
While many older professionals are still living from paycheck to paycheck despite earning hefty salaries, some are secretly financially independent, and it is these people who will be able to slowly wind down their careers or opt to work part-time as their energy dwindles with age, rather than fear retrenchment at every step.
If you want an extra dose of motivation, plan what you’ll do with your time when you finally achieve financial independence. Perhaps you’ll quit your job and work in a field you’ve always been interested in but never had the guts to enter because the pay was lower than what you were earning. Perhaps you’ll realise your dreams of starting a small business.
Making sure your kids are well looked after
Singaporean parents spend a lot on their kids. A news report from earlier this year revealed that more than half of Singaporean parents are willing to go into debt to finance their kids’ university education, while more than half say funding their children’s education is a higher priority than saving for their own retirement or paying their bills.
The Singapore tuition industry is worth over a billion dollars, and Singaporean parents seem all too willing to spend obscene amounts of cash on iPhones, iPads and other gadgets for their secondary school kids.
Unfortunately, for many Singaporean parents, spending tons of money on their kids to the detriment of their own retirement plans also means the only way they’ll get to stop working is to rely on handouts from their offspring.
But Singaporean parents who have their priorities straight and are able to plan for their own retirement while keeping their kids off the street are in the position to ensure their kids are well looked after and provided for when they pass on.
All Singaporean parents should consider purchasing life insurance just in case something happens to them and they are unable to provide for their family. In addition, if your family is the main reason you force yourself to go to work every day, you want to ensure you work hard to build your investment portfolio to grow your money so that you’ll have enough to pass on to your kids when they need it.
Ironically, doing what’s best for your kids financially doesn’t mean buying every single gadget and toy they ask for, and spending obscene amounts of money to send them for ballet and horse riding classes. It means being financially prudent so that your kids will inherit more than just debt from you when you pass on.
Which of the above goals resembles your own aspirations most closely? Tell us in the comments!
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