Personal Finance

Money Lies That You Probably Believe

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Truly, these lies may be holding you back from financial success.

I DO NOT NEED TO SAVE A LOT FOR RETIREMENT

In is evident that many senior citizens work beyond their 70’s. To survive their daily expenses, some Singaporean seniors acquire odd jobs. With this environment, you probably think that you can continue working beyond your retirement years. However, humans are subject to their declining health over time.

A senior adviser at a wealth management firm, Mr. Ken Moraif, once elaborated how dangerous it is to work for a lifetime. “With no savings, if our health fails, we not only have lost our income but we now also have a large expense.” The combination of these two factors can trap you into a bad financial situation.

LOW-INTEREST SAVINGS ACCOUNT IS AN INVESTMENT

When you think of savings, what is the first thing that pops into your mind? Is it a savings account or an emergency fund? Well, thinking that your stored cash is an investment is somewhat wrong.

Having excess cash to fulfill your emergency and living expenses is great. But, do not rely too much on your low-interest savings account. The value of your money kept there may decrese over time due to inflation. What shall you do instead? For starters, you may put a decent amount of your money into basic investment vehicles such as a mutual fund. Do your research!

I WILL BE EARNING MORE MONEY IN THE FUTURE

Do you plan for your future operating under a faulty assumption that your gross income will increase? I mean, it is basic Maths right? You get promoted as time passes. For some, believing these things can actually turn into a reality. How about others who stay in a position for a decade or so?

Believing that you will earn more money in the future without actual basis can lead to major purchases that you cannot afford. Can you really buy another HDB flat or a new car?

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We all want to assume that we will compensated as time goes on, but there are no guarantees! Your company may start laying off workers or even dissolve. Moreover, a critical illness may halt your career. To achieve financial freedom, it is better to stay within your means. This way, you can treat any pay increases as bonuses.

FRUGALITY IS ENOUGH TO SAVE YOU IN THE FUTURE

I considered myself as a frugal being once. Then, certain life problems came my way. My mother had an operation, which occurred simultaneously with our home renovation. My savings account became significantly slimmer afterwards. I realized that frugality alone cannot make a positive difference. I need to find a way to expand my opportunities to continue growing my wealth.

Directing all your energy towards ingenious ways to limit your expenses can limit your life. Instead, consider frugality (i.e., a means to eliminate waste) as a long-term financial goal. For instance, you may lessen your trips to Starbucks due to the free coffee provided by your workplace.

I AM NOT WEALTHY ENOUGH TO INVEST

It is common to perceive yourself as a person without the ability to invest. If you have money to satisfy your regular thirst for Starbucks then, you have enough money to invest. If you spend your money on designer watches then, you have enough money to invest. Do not get me started with spending your money on trendy Netflix or hefty shoes!

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The key to financial freedom is not how you perceive the prowess of your money, but how you spend it. You will find that you have sufficient funds to invest when you prioritize your long-term goals over buying unnecessary material goods.

Sources: 1 & 2

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