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Solution to the Really Poor May not be a Better Savings Account

I read this article by Seedly where Ming Feng discusses that very popular subject the class divide.

Ming Feng believes that the commonality, whether you are rich or poor is personal finance. There are some low hanging levers that you can pull that can push you on the path to greater social mobility. There are also tougher levers to pull.

I am not sure if I agree.

The older that I get, the more I realize that personal finance helps a lot if there are personal money that you can make a decision on.

Knowledge is immensely helpful definitely because it irons out some wrong preconceived notion about money, but it also provides you with options.

In risk management, the solution is to see the various options that is available. Knowledge and wisdom allows us to have that.

Higher yielding accounts and Passive Investing will work better if you have free cash flow.

However, you do not graduate to a higher social group through saving money and building wealth with passive investing.

You need something more than that.

When I wrote about the wealthy formula and all these mumbo jumbo on financial planning, I somehow realize that I am looking at life through the lens of someone who is having enough challenges and struggling to survive.

If I take a step back, I realize that though a lot of us are struggling, we are not doing too badly in life.

The reason for this is that, like my article recently on optimizing your spending, we still have free cash flow to make decision upon. We made mistakes and we could take a step back, retool, and get on with our lives.

Portfolios of the Poor exposes a lot of financial bloggers who read enough that, for those that are really poor, they have no choice but to make the best decision on their money.

If you don’t know how to plan your money, you are truly fxxked because you really don’t have money for anything.

Personal finance is part of their system, whether its fundamentally sound or not. Sometimes, you do not have a choice but to take on a 20% interest loan. If you don’t, the main breadwinner cannot recover from the illness.

In Singapore, we probably can’t say a lot of people are like the examples in the book. However, the struggle is that a lot do not have free cash flow. You cannot have the money to make a decision upon.

In my article on optimizing expenses, I get a comment like this:

May I ask if it is possible for people of lower income groups to be able to break free of the poverty?

Your article that mentioned about ‘privilege’ as a factor why the rich gets richer, and the poor gets poorer — the rich (as well as the middle class) get to squirrel some of their discretionary income for savings and wealth building. It is not easy, as a high portion of their “income” (including social assistance) goes towards basic necessities, and they also do not have much emergency funds to buffer against sudden shocks in their lives.

It is also unlikely for them to read articles like yours to gain knowledge about wealth building, investments, and financial planning, but they are also the very group which needs such information the most.

She might be right.

I think she has a rather good grasp of the situation. My reply to her is that some, but not all would come across my content. There are different levels of lower middle income to low income. For some, they will be able to be upwardly mobile.

Deep down inside, I know this is just being an arm chair adviser. After reading that book, you realize you know jack shit about solving these kinds of tough issues.

You only know how to solve “rich man’s problem”, when they have free cash flow to make decisions upon.

I used to follow intently this financial podcaster called Joshua Sheats. He has some really good content in the past, and has some really good intentions.

He had some really good finance content catering to not just those high net worth but also those who are struggling to make sense of things.

One of the best podcast he came up with was a philosophical look at How I Would Become A Millionaire With a Minimum Wage Job at Walmart. He knows his shit because he mixed around with enough of the migrant side of Florida to know the character traits of those who are successful versus not, and how do those who earned very little survive.

However, when he did a survey of his readers, for advertisement purposes, he realize that the large majority of his audience are high net worth, or those who are earning six figures.

And so in order for him to make money, his content would have to cater more to this group of people.

I think my content is on a different scale but the idea is the same.

The problems of the majority of the readers are those earning decent wages and trying to make sense of it. In other words, people with free cash flows.

You have a problem and suddenly you feel vulnerable about it.

So you search it up online and you found me. Or Joshua.

Those that truly need help to progress socially do not talk about investing. That is a not a priority at all.

The priority is creating the cash flow to meet mandatory spending.

Priorities are different for young students as well.

And because their priorities are different, their social media feeds are very different from ours. You do not see Seedly and Dollars and Sense, 2 of the biggest finance space in Singapore, in their feeds. It will be something else.

How do I know this?

Let’s just say that while I know how big these finance sites are, my co-workers have not heard much about them.

I feel that help can only be done through social engagement.

Should we just put Force Different Group of People Together?

To have social mobility, it is pretty challenging these days. I spoke to my friend Joel, who teaches trading at Mr Finance Savvy.

He knows the ITE student scene better. Those conversations that I have with him puts more doubts in my head how to pull people out of this rut with personal finance.

We have bigger problems than what personal finance can solve. There are motivated students that tries to do well academically, but life is so bullshit that its an uphill struggle.

To make matters worse a lot could not climb out because while they are good, the bell shaped curve would mean only those very top of the pile qualifies to move on to higher education.

Solving a lot of real life money problems is more than money. Is about going to people often enough to influence / persuade them change their opinions, their value system so that they can start with a little change.

I have no solution to the class divide.

This is way above my pay-scale.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often.

Here are My Topical Resources on:

  1. Building Your Wealth Foundation – You know this baseline, your long term wealth should be pretty well managed
  2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
  3. Learning about REITs – The Deeper stuff on REIT investing
  4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
  5. Free Stock Portfolio Tracking Google Sheets that many love
  6. Retirement Planning, Financial Independence and Spending down money




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Hong Charn Wai

Sunday 21st of October 2018

Thank you for your sharing

Ying Wei

Sunday 21st of October 2018

Seem like my casual comment in your previous article was mentioned. Among many finance bloggers, you are the rare few that agree that poverty is not entirely about personal finance.

Well, if you did not plan well when you are “well-to-do”, I guess it is indeed your personal responsibility for your predicament (Like not having income protection when you are employed; not getting health insurance when you are healthy; or overspending on luxury goods in excess of your monthly income).

But if you are born in a low income family, you are imbued in an environment which struggled to make ends meet and other financial insecurity, you also do not have buffer to fall back on, nor the belief that you can break out of the poverty cycle. One or two children from poorer families with the faith, and determination to succeed will do so, but many others will be left behind.

And if you had indeed fallen into financial hardship, it may also be tremendously difficult for you to pull your self back up unless you have other invaluable resources - family, friends, and community support, personal skills and competency, connections. Support from government (interim financial assistance (Comcare)) can buy you time to pick your self up (getting a job), or you might be dependent on it almost perpetually (I.e. elderly on long term financial assistance schemes).

Thus to me, wealth is one of the resources that give you options in life.

This is evident in people who are suicidal (over issues like debt), could not see beyond the enormity of their woes at that moment in time and thus are stressed out over the purpose over their existence. They will require counselors and guidance of others people to point out the availability of other alternatives to their problems (credit counseling, debt restructuring and etc).

Thus I read your articles, not to get rich, but to be able to manage my money when I still have the options, time and resources to do so. :-) ——- PS: Sharing an interesting article on the myth of meritocracy:

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