When I was in secondary school, I once borrowed $30 from a friend to buy some a pair of clownish JNCO jeans (oh the shame). That was my first and thankfully last experience with getting into debt in the name of shopping.
Other Singaporeans haven’t been so lucky, judging by the number of people who still think it’s not completely dumb to borrow $100,000 for a wedding or roll over their credit card balances each month because they’d rather spend the money on shoes than pay off that debt.
Sooner or later, most people learn the folly of their ways, but by that time it’s too late and they’re already desperately trying to brainwash their kids into giving them hefty allowances when they grow up or trying to look for a new job despite after being retrenched despite being close to retirement age.
None of this would happen if people would learn these personal finance lessons in their fresh-faced early twenties.
1. You should start saving for retirement the moment you start earning money
Not sure when it became fashionable to do so, but many young Singaporeans seem to think they’re obliged to spend their entire first paycheck. It’s practically a rite of passage.
First, they need to treat their parents and all their close friends to meals and a round of drinks. Then with the remaining money they buy themselves a watch or handbag they would never have been able to afford as students, because it seems they need a reminder that they’re now old enough to buy their own toys.
Sadly, most Singaporeans are woefully unprepared for retirement. A shocking 41% of Singaporeans haven’t socked away a single cent towards retirement.
If you’re smart, you’ll start saving for retirement the minute you start earning money. Yes, it sounds boring as hell, but do it anyway, because the truth is that working in Singapore can be a hard slog. Hours are long, the workplace is employer-centric and 75% of people here think of their jobs only as a means to avoid starvation.
By building your retirement fund, you’re buying your freedom to retire someday. You’re giving yourself the chance to work less hard when you’re older, or give up a stressful, soulless career for something more meaningful. Even if you actually like your job, you’ll like it a lot more when you’re doing it because you want to and not because you’re forced to.
2. No, your credit cards are not giving you free money
When you were a kid, if you didn’t have any cash left in your little purse, that meant you didn’t get to buy an extra curry puff in the school canteen. Too bad.
So when the concept of credit cards is first introduced to a young, naive 20-something who’s still stinging from the memory of being the kid at school with the fewest Pokemon cards, it can sound like a dream. The bank pays for you, so even if you have no money left in your savings account you can still shop as much as you like! Great!
Unfortunately, that kind of thinking is a surefire way to end up like one of the 85,352 Singaporeans with unsecured debt they can’t pay off.
Credit card debt is a growing problem here, as shopaholics will soon find out. If you’re smart, you’ll realise early on that not paying off your credit card bills in full each month is foolishness, as you essentially end up losing money to the bank for nothing and your initial debt can get way bigger in a short amount of time.
3. There is no one to impress
Singaporean kids are rarely taught by their parents the value of being an individual. Instead, they’re always being asked why they can’t be more like Aunty Karen’s nephew who scored 270 in the PSLE, or the neighbour’s daughter who’s so well-behaved.
Every 90s kid remembers how G-Shock and Baby-G watches were once all the rage. There was always that one kid at school who had multiple G-Shocks, and all his classmates secretly wished they were him.
Many Singaporean adults grow up still wanting to be that kid everyone is so impressed by, except now the goalposts have shifted, and instead of a G-Shock watch it’s a Rolex with an Audi and a Raffles Place corner office to match. It’s the wedding at Capella and Celine handbag, the frequent European holidays painstakingly documented on Facebook and the whiskeys at bars where everyone else is a banker.
The terrifying thing is that lots of the glamorous looking people you see in the Marina Bay and Raffles Place area on Friday nights sipping on their martinis with their Prada bags in their laps can barely afford their lifestyles. Some are in debt, some are barely saving, but everything else thinks they look great, so they persist.
That’s why there are so many reports about people in their 20s and 30s who get into ridiculous amounts of debt just to look good.
The sooner you learn not to be a slave to the desire to impress people, the sooner you’ll be able to make your money work for you, rather than for others.
Do you have any other personal finance advice for people in their early twenties? Tell us in the comments!