It’s common for many of us to have some form of money fears while growing up. These could include worries over having enough money to raise your own family, buy a home, take care of your elderly parents or whether you can ever save enough for your retirement.
It could even be something as simple as saving enough money so that we can renovate and furnish our new home, as the video below shows.
To get some perspective of the common money fears that young Singaporeans have, we spoke to three finance influencers to find out what their biggest money fear was growing up, and what they did about it as adults.
# 1 Can I Afford A Home In Singapore?
Dinesh Dayani, 30, Co-Founder Of DollarsAndSense.sg
Image Credit: Dinesh Dayani
Biggest Money Fear: Not Being Able To Own A Home
During his younger days, Dinesh was already familiar with the housing market in Singapore as his family shifted homes quite a few times. This allowed him to understand the cost of homes in Singapore. Dinesh’s biggest financial worry while growing up was not being able to afford his own home.
How did you cope with your financial fear?
Dinesh Dayani (DD): As I grew up, I realised that homes in Singapore were well within people’s reach and that it was just a matter of our expectations. Among HDB flats, there are 2-room or 3-room flats for those who want to start out small. There are also 4 and 5-room flats for those who want a bigger space.
I knew then that even if I didn’t manage to be as successful as I hoped to be, I could still afford a home. More so, as there are grants available for Singaporeans to tap on to reduce the cost of getting our first home.
Of course, this also means being financially responsible as an adult – holding a job, saving more by questioning the usefulness and need of each expense, whether it’s a $2 coffee or a $2,000 laptop.
During National Service, I began to realise that while saving is important, being able to invest and grow my money in the long-term is equally important. By the time I graduated from university, I had save enough to start investing. More importantly, I have gain sufficient knowledge to be confident enough to start investing in the stock market.
As you started taking these little steps, what were some other valuable lessons you picked up?
DD: One important lesson I learnt was not to buy and sell stocks based on personal emotions. I also learnt that, due to my age, long-term index investing makes a lot of sense – it’s a good place for people around my age who want to start out on their investing journey.
After I started working full-time, I began to understand the usefulness of CPF a little more, especially in terms of how it could help me save and work towards owning my first home. At the same time, I’ve remained mindful of the fact that CPF is also meant for my retirement needs.
One strategy I’ve implemented is to top up my CPF Special Account (SA) each year. I use cash instead of transferring monies from my CPF Ordinary Account (OA) because I have not bought a home yet. This way, when I do buy a home, I can use monies from my OA to pay for my downpayment in full (when using an HDB loan) or partially (when using a bank loan). While I wait for that day to arrive, my OA savings earn an attractive interest of 2.5% – 3.5% per annum*.
It is a good strategy to top up SA with cash because SA savings earn an interest of up to 5% per annum*, while cash in the bank earns me close to nothing unless I am willing to risk investing my money. In addition, this helps me save on taxes^.
I also learnt that we should look at personal finance areas as interlinked to one another, rather than to view them as standalone matters. The financial plans I have made in the past would go a long way in helping me prepare for my future.
Start saving and investing early. One misconception that young people have is that they should set fixed financial goals before saving and investing towards them. That’s not totally true. It’s perfectly fine to start saving and investing even without having fixed goals yet.
When I first started, I wasn’t thinking about buying a home or planning for my retirement. I just decided to start knowing that the money invested would come in handy for me in the future when I have financial commitments as an adult.
For me, this is likely to be in the form of buying my first HDB flat. When the time comes, I will be using the money I have saved and invested, as well as my OA savings to fund my purchase. At the same time, I will be leveraging on grants available as well.
*Extra 1% interest is paid on the first $60,000 of combined balances in all 3 CPF accounts, of which up to $20,000 comes from your Ordinary Account (OA).
^You can enjoy tax relief of up to $7,000 per calendar year when topping up your SA, capped at the current Full Retirement Sum (FRS). Cash top-ups beyond the current FRS will not be eligible for tax relief. Find out more here.
# 2 How Much Money Do I Need?
Kyith Ng (36), Founder Of Investment Moats
Image credit: Kyith Ng
Biggest Money Fear: Ensuring I Have Enough Savings To Fall Back On During Challenging Times
Through his website Investment Moats, Kyith has been sharing his investment journey and experiences with fellow Singaporeans since 2005.
Growing up in a lower middle-income family, Kyith first learnt the importance of financial planning when money became a challenge for his family during the Asian Financial Crisis in the late 1990s.
How did you feel about that and how did you deal with the challenging times?
Kyith Ng (KN): It was not so much fear. But the anxiety of not knowing whether there would be enough money for the family.
I thought the best way to manage the situation was to scrimp and save more. I didn’t try to invest my money because I was afraid of losing it in my investments.
What were some steps that you took to address the financial worries that you had?
KN: I was about to enter the army. I made a decision not to take money from my parents anymore. Back then, a recruit’s pay was about $240 each month. A corporal’s pay was $385 each month. I managed to live with that and to also save some of it.
During my last year in university, I was looking for something that was safe, yet provided better returns than fixed deposits. I found Fundsupermart.com, which had just started then.
Fundsupermart became a very good place for me to interact with like-minded individuals. It also provided me with good materials to kick-start my investment journey. I was introduced to books such as The Four Pillars of Investing, Random Walk Down Wall Street and Common Sense on Mutual Funds.
At that time, I prioritised the goal of building a pot of money. My reasoning was that with this sum of money backing me up, it would allow me the opportunity to do what I want in life without having to worry about money.
I worked out a sum of $135,000 to achieve by age 35 (11 years later). I calculated that if I put away $800 a month consistently, this target would be reached.
What were some other valuable lessons that you learnt along the way in your investment journey?
KN: One takeaway was that saving entails tradeoff. This also means getting used to the fact that those around you may not fully appreciate why you are “sacrificing” your lifestyle to work towards the financial goals you have set for yourself.
At the end of the day, it’s your money and your choice on how you want to use it. You can spend it, save it or invest it. So you have to decide what your financial goals are, and to be comfortable in prioritising it over other lifestyle needs.
Have an emergency fund of at least 6 to 9 months of your monthly expenses. At the same time, if you want to explore doing things you like for a period of time, you should also accumulate more savings. One way to do so is to put your savings into investments, which would enable you to continue earning returns. This helps you to grow your savings even during periods of time when you are not working and do not have a regular income.
# 3 Would I Be Able To Provide For My Family?
Anna Vanessa Haotanto, 32, Founder Of The New Savvy
Image Credit: Singapore Computer Society
Biggest Money Fear: Getting Caught Up In Debts And Not Having Enough To Provide For My Family
Since young, Anna had always been interested in the intricacies of money – for some people it was so easy but for others, so difficult. The idea of making her money work harder for her fascinated her. It felt like a much better way compared to living from pay cheque to pay cheque, and having to feel stressed about money.
During her days in Junior College, Anna did some volunteer work and noticed how some women were stuck in unhappy situations or marriages as they were not working or did not have any earning capabilities. This motivated her to protect herself and her family financially.
What did you do to tackle the financial worry of not having enough to provide for yourself and your family?
Anna Vanessa (Anna): I saved most of my money, especially in the earlier part of my career. At this stage of our lives as working adults, there are a lot of distractions that could make you spend more than you need to. It’s important to differentiate between needs and wants. For me, I didn’t splurge on luxuries.
I knew what I wanted to achieve. I had a definite goal and I worked backwards on how I could reach it. For example, I knew I wanted to buy my first property before I was 30, a goal which I managed to achieve when I was 28.
Aside from buying a property, I also invested in stocks and bonds. I have grown my wealth and gained passive income with the returns from these investments.
In addition to investing, I also bought life, health and personal accident insurance to ensure that my family would be financially protected should anything happen to me. I think being an “adult” means being responsible in ensuring that my family is well taken care of.
A lot of financial goals can be daunting at first. The trick is to always divide it into smaller milestones. Have a step-by-step plan and make sure you are on track. Be conscientious and accountable to yourself, but don’t forget to celebrate your wins.
Were there schemes that you were able to utilise to help you achieve your goals?
Anna: As you get older, you may need to allocate more money for your healthcare. It only takes one major illness to wipe out your savings. It is important to know exactly what your insurance covers you for.
For example, MediShield Life provides coverage that is sized for subsidised treatment in a Class B2 or C ward in public hospitals. If you intend to seek medical care in Class A/B1/B2+ wards of public hospitals or at private hospitals, you can consider getting additional coverage in the form of an Integrated Shield Plan.
Personally, I recommend putting 15-20% of your monthly pay cheque into savings. It is tough to meet this savings goal if you don’t budget properly. If you take your pay cheque, cover your expenses and then spend the rest, how much do you have left on average to allocate to savings?
To make sure you do not miss the 15-20% savings goal, write up a budget and itemise your income and expenses. If you want a new pair of shoes and a new smartphone in the same month, be disciplined and delay buying one item until the following month.
Growing Up And Making Adult Decisions With Our Money
As Uncle Ben once said to Spiderman, “With great power comes great responsibility”.
The same message applies to our financial management habits when we become adults. After we start working, how we spend our money is at our own discretion. This can be a great feeling, but it comes with its own sets of responsibilities.
Financial fears such as not having enough money to retire, buy a home or take care of our family members are very real. However, as our three financially-savvy Singaporean friends can testify, they can be conquered as long as we diligently take the right steps towards managing our money wisely.
This article was written in collaboration with the CPF Board. All views expressed in the article are the independent opinion of the interviewees and DollarsAndSense.sg