Folks nowadays seem to be more tune in to social media and less to traditional media such as television. Perhaps that is due to the compress time from working longer hours, housework and family.
When it comes to money there are some shows that are rather informative and the Common Cents segment on Channel 5 are rather interesting. This episode 8 was shared to me on Facebook The host Steve brought a couple who is slightly younger than myself at 29-30 years old with 2 children on how they are doing financially. the husband is a personal trainer and the wife is a human resource associate with a Japanese game company.
What I seem to find is that a few of the guest that they brought on works in your not so standard type of profession such as a civil servant, engineering or banking and finance. The couple works within a household income of around SG$8000.
You can view the full episode here: Common Cents – Episode 8 – Financial Planning – Starting a Family
The segment introduce three groups of people that helped the family make sense of their budgeting, their financial planning and money values. They are respectively Jopez Academy, Providend and iTransform Institute
There are a few lesson learn through the segment:
- The lady of the house was surprised to learn that by not tracking her money for a period of time, the amount she actually spent is far from what was the figure in her mind
- The man of the house stated that he is rather conservative in his risk appetite (no uncalculated risk) yet would like to find ways to generate passive income (I am rather against that phrase passive income unfortunately). That seems rather contradictory and something difficult to do considering in most thing, to get a higher return you have to subject yourself to more volatility
- The couple genuinely wants to rely on themselves for retirement and get their protection needs covered
- The protection analysis seem to yield a common theme of much insurance for the children but not enough for the main breadwinners
- They tend to take action by spending first then save what is left, instead of other way
The first part of the segment provide a simple visualization of how to compartmentalize the family’s house hold income.
The break down is something that I disagree with, as you would as well, but discussing why you disagree with is the first part to tweaking your allocation. The categories of each jar is how most people should look at their income, based on time horizon when they require the money and specific jobs the money is worked for.
The financial planning presents much hard reality that the figures required to put the children to university in 18-19 years and retirement is huge.
I suppose there are much benefits to putting more effort into bringing up a child capable of earning a scholarship or one that can work for part of his university education. Hell, perhaps come 18 years down the road, university fee dynamics have changed so much that its drastically lower (if you read enough that this field is super riped for disruption).
I felt that the sum looks really scary. $350,000 in 18 years at 5%, the present value is $145,000. Do we really spend that much in a local education today???
If you contrast the overseas education fee 18 years later and that of what is required for retirement 30 years later at age 55, the retirement sum looks much manageable then the university fee, which makes me question the validity of the overseas university figure considering you only need to stay there for 4 years versus the expenses required for 30 years of your life in retirement.
Still, I am much in agreement with the terms used in the show by Providend, that although its labelled here as retirement, they brand this whole segment as achieving your financial independence. That is a term much more readily accepted by millennials consider how different their outlook on life is.
Should they require $4000 in present value then? This was the idea the husband of the house was thinking of, and I felt that perhaps he does not have a clear idea that life in retirement can be very different from supporting a family. There are certain expenses that he won’t have then.
The next segment on what kind of money type you are is rather interesting. Angie from iTransform listed a few money types that we tend to fall into. By knowing which type we exhibit we are better able to shift how we view money.
It should be noted that you can exhibit more than 1 of these money types.
The innocent type is someone who tends not to want to discuss money related stuff and can be rather overwhelmed with money. I do find much of my peers falling into this category despite their exceptional competence in their PMET profession.
If there is one type that mixes well with the innocent type, it is the fool type, who tends to be undisciplined with their money, like to spend money and always find ways to feed their habits. The term is rather harsh, but it seem to point to folks who also do not have the patience to learn about money as well.
The Martyr is interesting. You are likely someone who like to sacrifice money wise for the good of others but feel really #@$% when you need help, your friend doesn’t want to help you back. I am not sure I have been in this situation. I am not one who would sacrifice to help when it comes to money (or didn’t have the chance to) and usually not in a position when I need help from others (unless when bank refuses to loan me money for my flat!)
This money type matches some of my traits. Someone who have a problem spending money, likes to control not just their money but their family’s money and would go through drastic actions just to achieve their aims. This is not a good behaviour. I remember I have a friend’s mother, whose money is this sort. If someone is spending money, it tends to be her. She tries all sort of means to influence her children to give her most of their money and of course my friend doesn’t agree with that policy.
The artist is someone who puts spiritual or artistic ideals above money and money should not come above in prioritization. The problem is that in this world, without managing money well, it is a serious issue. You can be a photography enthusiast who buys the best camera equipment for your craft, without batting an eye lit about how much they are selling short in other areas.
Warrior is what i believe most season money managers should at least exhibit, being very clear of what they want in life and being very vigilant to stick to that vision.
The last money type is the money magician who is someone who have made peace with money and have a good relationship with it.
So I am at some point a tyrant, a warrior and a magician. Sounds like some of those fantasy end game boss you hate to fight against who is tough to beat yet possess an array of spells that you wonder why your game character is so deficient in.
Perhaps you can identify which money types you possess and what the people around you possess. Which money type do you see as the prevalent types?
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I prefer to work with businesses that I know will take a holistic view of the clients’ unique situation and planning processes that I have reviewed and trusted.
As an introducer, I am not permitted to give advice or provide recommendations on any investment product, market any collective investment scheme or arrange any life insurance contract, to or for any particular client, except to the extent of carrying out introducing activities. Thus, for your specific financial needs, I strongly recommend that you speak to a licensed representative from Providend as they will be able to help you.
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