First Note: I'm not a financial planner, nor am I officially trained in any financial planning courses. No CFP, no insurance agent background for me to lay out my credentials to plump out the credibility of what I am talking about. What I'll discuss here though, is my own view on financial planning for the average uni student. I'll use the Singapore context, but some of these opinions and viewpoints may be applicable to other lands. =)
Well let's get started shall we? =) The first proper post for Money-Buddy shall address the issue of financial planning for the uni (aka college) student. I won't go into the details like technical analysis or MACD charts and stuff like that, I prefer layman's stuff for now, so don't worry about technical jargon and stuff like that. This post is just to give you a gentle push towards being open to financial planning.
Some of you may ponder... "Why should I plan my finances now? I'm still in uni, I've got to explore the world, explore my individuality, and enjoy the last few years of my real life before I enter the workforce where I have to start behaving like a real adult. " I don't mean you have to be like a psyched-up finance-driven money-grubbin' person just because you do financial planning. I certainly put a lot of heart on character and having a well-balanced life.
What I hope to bring across is that, even as you enjoy your university life, play your sports and carry out your other commitments to hall or societies etc, you should still keep an eye on your finances so that you don't graduate and start from square one like a sizable number of people do. Many of us will start our independent lives (ie. free from parents' protection) after we graduate. Most of us will look at our bank accounts, see a 4-digit number (well, some of you luckier ones out there may have 5-digit bank balances. If you have 6-digits in your bank... haha dang you got it good lolz!) and tell ourselves:" I'm in my early twenties. I'll get a decent job, work hard. And by the time I'm 26, I'll have 100k in my bank!".
It doesn't work this way... =) Think CPF, think of daily expenses, think of income tax, think of the money you give to your parents. Even if you earn about $2700 a month with your first job, you'll be left with, taking into account the gloomy scenario I painted above, about $1200 at the end of the month if you're lucky. $100k divided by $1200 a month will give you a grand total of about 7 years to reach that figure. By then you'll be at a really mature 28-30 years old. Don't forget, all these are EVEN without you taking into consideration buying your flat. (and your car? And marriage? You can't expect to get married and throw your wedding dinner at Lau Pa Sat right?)
So if you don't want to come out of graduation day standing at the bottom of a 100-foot ladder, try to make use of these 3 to 4 years in university to bring yourself up a few rungs. You'll find your shoulders a lot lighter when you step out into the real world as you have the fruits of the past few years' planning propping you up a fair bit.
I'll paint you this scenario. Say you have about $5000 in your bank now. Wouldn't it be nice to make that $5000 do something more useful instead of sitting in a bank earning interest of less than 0.3% PER ANNUM? Imagine if you can do something so that that $5000 accrues interest and increases steadily over 4 years. Add your savings each month to that figure and voila, you'll have a pretty decent kitty of about $11,000 when you graduate from that $5000. It's not much, but imagine if you continue with your shopping, blowing all your monthly allowances and not doing anything with that $5000. Assuming you were a good kid and didn't touch that $5000, you'll have a grand total of $5060. Yes $60 interest from 4 years of that $5000 sitting in your savings account. That's like 60 bubble teas if you want to make yourself feel better lolz =)
Now which scenario sounds nicer? $11,000 for a bit of work every month? Or a measly $5060 after 4 years in university? I know it sounds a bit extreme, but I am certain these figures hold true for quite a number of students around Singapore. You don't have to scrimp and save just to make that $11,000 either. It's just a little bit of awareness, a little bit of prudence and a tiny bit of sacrifice to make your post-graduate life start off a little bit more sprightly. =)
Cheers!
Spalsh
PS: I've hyperlinked the income tax and bank savings account balances above. For those who can't access the links, here are the links once again. Note that I have nothing against DBS or anything like that. I posted their rates here because in my opinion, most people are using DBS/POSB savings accounts. =)
DBS/POSB Savings Account Interest
http://www.dbs.com/ratesonline/dddd.html
Singapore Residents Income Tax
http://www.iras.gov.sg/ESVPortal/iit/iit-se-a1.1.15+tax+rates+for+resident+individuals.asp
Well let's get started shall we? =) The first proper post for Money-Buddy shall address the issue of financial planning for the uni (aka college) student. I won't go into the details like technical analysis or MACD charts and stuff like that, I prefer layman's stuff for now, so don't worry about technical jargon and stuff like that. This post is just to give you a gentle push towards being open to financial planning.
Some of you may ponder... "Why should I plan my finances now? I'm still in uni, I've got to explore the world, explore my individuality, and enjoy the last few years of my real life before I enter the workforce where I have to start behaving like a real adult. " I don't mean you have to be like a psyched-up finance-driven money-grubbin' person just because you do financial planning. I certainly put a lot of heart on character and having a well-balanced life.
What I hope to bring across is that, even as you enjoy your university life, play your sports and carry out your other commitments to hall or societies etc, you should still keep an eye on your finances so that you don't graduate and start from square one like a sizable number of people do. Many of us will start our independent lives (ie. free from parents' protection) after we graduate. Most of us will look at our bank accounts, see a 4-digit number (well, some of you luckier ones out there may have 5-digit bank balances. If you have 6-digits in your bank... haha dang you got it good lolz!) and tell ourselves:" I'm in my early twenties. I'll get a decent job, work hard. And by the time I'm 26, I'll have 100k in my bank!".
It doesn't work this way... =) Think CPF, think of daily expenses, think of income tax, think of the money you give to your parents. Even if you earn about $2700 a month with your first job, you'll be left with, taking into account the gloomy scenario I painted above, about $1200 at the end of the month if you're lucky. $100k divided by $1200 a month will give you a grand total of about 7 years to reach that figure. By then you'll be at a really mature 28-30 years old. Don't forget, all these are EVEN without you taking into consideration buying your flat. (and your car? And marriage? You can't expect to get married and throw your wedding dinner at Lau Pa Sat right?)
So if you don't want to come out of graduation day standing at the bottom of a 100-foot ladder, try to make use of these 3 to 4 years in university to bring yourself up a few rungs. You'll find your shoulders a lot lighter when you step out into the real world as you have the fruits of the past few years' planning propping you up a fair bit.
I'll paint you this scenario. Say you have about $5000 in your bank now. Wouldn't it be nice to make that $5000 do something more useful instead of sitting in a bank earning interest of less than 0.3% PER ANNUM? Imagine if you can do something so that that $5000 accrues interest and increases steadily over 4 years. Add your savings each month to that figure and voila, you'll have a pretty decent kitty of about $11,000 when you graduate from that $5000. It's not much, but imagine if you continue with your shopping, blowing all your monthly allowances and not doing anything with that $5000. Assuming you were a good kid and didn't touch that $5000, you'll have a grand total of $5060. Yes $60 interest from 4 years of that $5000 sitting in your savings account. That's like 60 bubble teas if you want to make yourself feel better lolz =)
Now which scenario sounds nicer? $11,000 for a bit of work every month? Or a measly $5060 after 4 years in university? I know it sounds a bit extreme, but I am certain these figures hold true for quite a number of students around Singapore. You don't have to scrimp and save just to make that $11,000 either. It's just a little bit of awareness, a little bit of prudence and a tiny bit of sacrifice to make your post-graduate life start off a little bit more sprightly. =)
Cheers!
Spalsh
PS: I've hyperlinked the income tax and bank savings account balances above. For those who can't access the links, here are the links once again. Note that I have nothing against DBS or anything like that. I posted their rates here because in my opinion, most people are using DBS/POSB savings accounts. =)
DBS/POSB Savings Account Interest
http://www.dbs.com/ratesonline/dddd.html
Singapore Residents Income Tax
http://www.iras.gov.sg/ESVPortal/iit/iit-se-a1.1.15+tax+rates+for+resident+individuals.asp
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