Sometimes we can be too hard on ourselves, and other
times, not enough. When it comes to handling finances, how we
handle our money can be benchmarks to see if we’re doing okay. Of
course, we also want to figure out how to further improve ourselves
financially as well as in many other aspects of life.
Here are some financial benchmarks to figure out if you
have a good grasp of your money.
This would be an interesting question to ask anyone.
Chris Rock once mentioned that “Wealth is not about having a lot of
money; it is about having a lot of options.”
In this case, it is the ability to stay afloat the
moment your boss doesn’t pay you for the month.
While we all have bills to pay, do we have enough to
last through more than a month if the company doesn’t pay us, or
you suddenly lose your job? This includes rent, student and credit
card loans, etc.
A true measure of wealth would be to living comfortably
indefinitely. In this case, let’s just set the base standard to
being comfortable without any salary for 3 months
The debts can come in any form – from overdue education
fees to credit card and housing or car loans; they can be the
liabilities that drain a very large proportion of your income very
quickly.
Of course, these debts can also come
from overspending. Obviously, that isn’t a good
thing, but that could be one of the reasons as well.
We all do have debts to pay. However, if you’ve managed
to pay off a decent amount of debts and you have less to pay off
now than you did last year, congratulations! A big shackle would
have been removed from your leg.
Advice For Millennials: How Can Investment Advisors
Help?
This would perhaps be one of the most important things
to do. Experts say that everyone should save at least 10-20% of the
net salary drawn (after taxes and CPF) to ensure a comfortable
cushion for living, as well as to have enough money for a rainy. Of
course, there isn’t a one-size-fits-all plan. If you have a
larger amount of
debt to service, then obviously 20% may be a stretch even for
the most thrifty of us. If you have relatively little debt, saving
more isn’t going to be much of a problem too.
The more important issue here would be to contribute
regularly to a savings account, even if it’s a little to begin
with. If you start small, that amount can grow as your debts get
fully serviced, and more cash is free for you to save.
If more debts and loans can be paid off, it means more
cash would be freed for you to invest, save, or spend on that
vacation that you desperately need after months of hard
slogging.
Investing would be perhaps the holy grail of improving
one’s finances. We’ve all heard of people who have struck it big
investing in stocks, options or whatever financial instruments.
Proper investing and research on what you’re investing
in can often lead to very profitable returns. What makes it better
is that these research and investing skills can also further
translate into skills that can be transferrable to other areas of
research (property, land etc.) as well as channelling those skills
into a start-up that you may want to do in the near future!
Check out some of the articles we’ve written
about investing.
Many prominent people in the world – from Warren
Buffett to Mark Zuckerberg and Bill Gates – recommend reading at
least a few books a year to improve themselves. The topics can
range from technical, science-based stuff like biology and
astrophysics, finances and investing, all the way to even novels
and self-help books. The key message in reading books would be to
improve ourselves as people, and to further enhance our knowledge
of our vast world.
Interestingly, books that are seemingly not related to
finance like biology can eventually find concepts that can relate
to the financial field, for example, how one derivative or equity
change in the market can result in a ripple effect, similar to how
a breakdown in an organ can lead to multiple organ failures.
Credit Habits To Start Immediately In Your
20s
source