We encounter several new hurdles as young adults. We no longer receive a daily allowance from our parents and we have to pay the bills. Not to mention, our financial capabilities are seemingly low at the start of our careers.
On that note, here are three financial issues that young Singaporeans face and ways to overcome each one…
ISSUE #1: LACK OF FINANCIAL KNOWLEDGE
We cannot deny the fact that personal finance is rarely taught in schools. According to Kevin Gallegos, a consumer finance expert at Freedom Financial Network, the Millennials’ crying need for more financial literacy cannot be overstated. It is never too late! Financial literacy is something you shape through conscious effort, much like learning how to write.
Young adults must take the initiative to educate themselves about the important topics surround money. These topics include budgeting monthly expenses, saving for retirement, and managing student loans. Following an online resource like MoneyDigest.sg or MoneySENSE.gov.sg can provide the foundation for you to learn the basics.
ISSUE #2: HAVING A LOW INCOME
Unless you are an heir to a successful company, the start of your career marks the time when your finances will be stretched. Having a low income impacts your ability to fulfill your primary needs such as food and shelter. Proper allocation of funds can help improve your situation.
Young Singaporeans shall distinguish between the needs and wants. If your income is not sufficient to address your primary needs then, you may consider taking a part-time job or freelance projects. Alternatively, you may eliminate unhealthy (and costly) lifestyle choices such as smoking. Imagine how much cash you will exhaust in a week if the price of a package of Marlboro cigarettes is about S$13!
ISSUE #3: CONFUSION BETWEEN SAVING AND INVESTING
Young adults are often experiencing a mix up between saving and investing. The idea behind it is similar, but the “mechanics” are different. Both involves the act of setting money aside for future use. The former is allocated after meeting your fixed and variable expenses. While, the latter is allocated if you want to grow your savings. Maintaining a realistic balance between these two is crucial for wealth cultivation.
Do not be afraid to read about investing as the power of compound interest works in your favor at the present time.
To conquer the challenges that young adults face, they must educate themselves about personal finance. This will help them manage their spending habits, repayment of student loans, and so on. This is a great start to your financial journey.
May you have the confidence to overcome each financial issue ahead!