If you’re on the cusp of turning 30 and have spent most of your life in Singapore, chances are you’ve never been through a war or had to sleep on the streets. On the other hand, chances are high that your parents drummed into your skull the importance of getting good grades at school and getting a good job.
Despite their relatively secure upbringing, the number of 20-somethings who are still clueless about their approach to money never fails to amaze me.
And while the Internet is full of articles about the financial goals you need to achieve by the time you hit 30 (build up an emergency fund, yada yada), we think it’s important that 20-somethings first figure out their approach to money. Everything else will flow much more easily then.
1. Think about the future of your career
Unless you’re one of the lucky few to have found your calling early on in life, I think it’s safe to say that most under-30s are a conflicted bunch when it comes to their careers.
I’m not pointing any fingers, okay? As someone who schlepped unhappily through office jobs before finally deciding to work for myself, I know only too well the frustration of not knowing what you want to do.
In fact, under-30s have gained a rather unsavoury reputation for being job hoppers and having no sticking power, as this 2012 article shows.
But while older workers might be quick to dismiss their younger counterparts as lazy and unreliable, at the root of the problem is a genuine desire on the part of many younger workers to build careers that provide more than just a regular paycheque.
I’m not going to lie and say you have to decide what you want to do for the rest of your life by 30, because many of you won’t. In fact, there is much evidence to suggest that job and career changes are fast becoming the norm.
But at the very least, before you hit 30, you should have done some serious thinking about the future of your career.
If you intend to quit your job and start a business somewhere down the road, leave your industry to do something that might be less profitable or start a completely new course of study, it’s about time to start putting plans in place for the future, and also to get realistic about your financial future.
For instance, when I knew I was going to quit my job as a lawyer to become self-employed, I didn’t just wake up one day and decide it was time to resign. Having a clear plan in mind made me realise I couldn’t ape the consumption patterns of my peers in the industry, and led to my being extremely cost conscious for a number of years.
2. Have a vague idea of the kind of lifestyle you want
When you were a kid, you might have imagined yourself becoming president or a Disney princess.
When you were 16, you might have imagined yourself living like a latter day Kurt Cobain or Paris Hilton.
By the time you’re approaching the big three-oh, however, you should already start to have a clear, realistic idea of the kind of lifestyle you want, not only now but also when you get older.
Despite the bright lights and advertising, many people just want a happy life with food to eat and something to look forward to at the end of the day.
When you realise that $50 restaurant meals aren’t necessarily part of the equation, planning your budget and finances becomes a lot more straightforward.
In particular, if you’ve just tied the knot and intend to have kids, envisioning the kind of life you’d like to build for you and your family is essential to planning your expenses. The earlier you consider future kid-related costs like education and healthcare, the sooner you can adjust your finances accordingly.
On the other hand, if you very consciously decide that being a Ferrari-driving, champagne-drinking socialite is on the cards for the future, then it will become clear that you need to either start working very hard or banking on a big inheritance. At least do something about it.
For Lionel, a 29-year-old civil servant, at age 27 the realisation hit him that he aspired to a life with few material needs, but also fewer work commitments. To this end, he has become quite frugal and saves most of his salary each month in hopes of attaining financial independence as soon as possible.
“I don’t hate my job, but I’m also quite certain I don’t want to have to be committed to it in the long term. My goal is to attain the freedom to travel and pursue my interests, so I’ve been working on downsizing my financial liabilities as much as possible.”
3. Change your mindset about consumption
Most people’s consumption habits evolve as they get older. Your spending habits will probably be different at 40 than they are at 20, and chances are you’ll be left with a few regrets about your past.
For many people, a sudden change in their lives often triggers a sharp change in consumption habits.
Many young couples cite having a child as such a trigger.
Yvette, a 37-year-old lawyer, says having two children in her early thirties has had a huge influence on her finances. “I didn’t intend to continue practising law full time due to the huge time commitment, but having two children in my 30s changed all that.”
But that doesn’t mean you need to wait until that happens before you revise your consumption habits. In fact, the earlier you do so the better.
In my teens and early 20s, I used to spend like there was no tomorrow, using up most of my allowance and money from part time work. Believe it or not, my monthly expenditure was 2-3 times what it is now as a working adult. The turning point came when I graduated, stopped receiving an allowance and spent a year working for $1,300 a month.
A year of working for $1,300 while many of my affluent peers were earning several times that amount completely transformed the way I thought about money. While my friends were buying Prada bags and gambling at MBS, I was eating sardine sandwiches in Ziplock bags during my lunch break and trying to save every cent I could.
Without that change in perspective, I wouldn’t be writing for MoneySmart today. Whether that is in fact a positive thing, I leave it to you to judge.
If you haven’t turned 30, what truths have you learnt about money so far? If you’re over 30, what do you wish you had learnt in your twenties? Let us know in the comments!
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