The good life is in your own hands
I may be only a dentist well versed with the matters of teeth and gums but I am a mature senior who has observed much. How other people have gone through the stormy billows of life and either become damaged financially or survive.
Life is uncertain. You may be blessed with a good card during which you strike fortune either through your own effort or through lady luck. What you do with it thereafter could give you a smooth ride through which you could explore all the interesting possibilities that life can offer.
On the other hand, a financial ruin will render so much hardship that living becomes a chore. Yet, not all is lost. One can recover from one’s misfortune and still emerge victoriously.
Financial ruin is often self-created so the mindful ones would avoid them from the very beginning. Learn from others who have gone through the vicissitudes of life.
1 Always have a roof over your head — -It’s not uncommon to find out that there are people who would mortgage their homes that are already paid up in full and reinvest into new businesses to achieve more returns.
However, things are not predictable. When the winds of fortune turned against them, I have witnessed people who lost their homes and their nest eggs.
One real-life example involved a relative who sold off his home to invest everything into his new business. Things changed very fast in the last few years, superseded by changing customer interests, different marketing strategies, escalating costs, and unfavorable changing business regulations.
The result was a loss of shelter and he had to move from place to place to house himself. Eventually, the business tanked and everything earned and built over more than half his life was gone. Fortunately, he has the fortitude and works even harder but expectations of a full recovery are remote.
The moral of the story is; Never sell off your home totally to invest in a business. A business is no guarantee but a home is a solid foundation that shields you from uncertainty. In my opinion, risks should only be taken with excess money.
2 Develop an additional income — -We should stay relevant in whatever we are good in. Keep updated, upskilled, and informed as change is the only constant. However, in today’s world, Covid-19 has made us realize that we need to be versatile and responsive.
It is crucial to pick up a new skill that may be entirely different from one’s main training and preferably to be Covid proof like digital skills as used in e-commerce or any skill such as educational services like teaching and tutoring that allows one to work from home. Doing something different from our mainstay can pique our creativity and interests as well.
In this way, we can stay challenged and financially viable when our job that involves human interaction becomes interrupted in a pandemic.
3 Have a comprehensive health policy — — Health issues are the main drain on one’s finances. Common sense tells us that we need to have adequate insurance and accident coverage as injuries and old age with its accompanying ailments will happen in our lives.
Intangible as it may seem, it is not only wise but fair to one’s family members to guard our own health and provide protection instead of depending on others in the event of inevitable circumstances.
A medical policy is not only for an emergency purpose but also to guard against chronic illness like cancer that is financially draining.
4 Have a high savings rate — -A high savings rate of 30% is quite commendable. For every $100, $30 that is saved and goes into a contingency plan like some low-risk instruments can help stave off a financial crisis. This is possible if one has the discipline to put aside this amount of money untouched and spend the rest with priority on necessities.
Do not save what is left after spending but spend what is left after saving — Warren Buffet
In Singapore, we enjoy a high rate of interest by putting money in the special account of our Central Provident Fund that pays up to 4% for our retirement funds. The moment you start working is the time you plan towards retirement and CPF in Singapore is one way. Click here.
5 Spending on Credit Cards — -Credit cards provide the convenience of not carrying too much cash around and there is a clear record of expenses. Moreover, rewards could be reaped in proportion to the amount of money spent that comes in the form of cash rebates, vouchers, and product exchanges.
Given that cards have become a way of life where purchases are concerned, it is wiser to switch to debit cards for those who cannot manage credit cards that require a prompt repayment of the credit used each month.
A debit card owner entitles him to the same privileges but operates on existing cash present in the account instead of spending borrowed money. Hence, spend what you can afford.
Still, some credit card owners make the mistake of paying only the minimum sum while the principal amount is generating high-interest rates that may top 29% imposed by some banks. At this rate, it is a runaway train, and getting into debt is a foreseeable outcome.
5 Watch your budget — -Check your spending habits and adjust accordingly. Don’t buy on a whim. At my age, I have seen many people overbuy stuff in their life that is repetitive and some become hoarders.
Impulse buying happens when one does not think through. Even if it is a sale, ask yourself — Do I need it? How does it improve my life? Is there a better buy?
Create your budget table here and get a handle on the flow of your money.
A budget is telling your money where to go instead of wondering where it went — -Dave Ramsey
6 Never become a guarantor for someone’s loan — Unless you have an immense amount of money and you trust the person who had asked you to guarantee, you run the risk of not getting back the borrowed sum and will have to pay for the defaulted amount.
Over the years, I have observed how some people became financially ruined by co-signing for someone’s loan. It obligates you as the primary borrower to pay up the loan.
7 Don’t put your eggs in one basket — While some investments may be risky, know your own risk appetite and diversify so that there is a balance between those that may deliver higher returns and those that protect your funds and allow them to grow at a steady rate.
People who dabble too much into speculative activities like the stock market, speculative real estate, and junk bonds may head for trouble unless you understand them.
Opt for the certificate of deposits, money market funds, and government bonds but the key is to know why and what you do.
You must gain control of your money or the lack of it will forever control you. — Dave Ramsey
Without staying on top of your finances, it will be a life of misery. It will be a life of missed opportunities and possibilities. It will be a life of regrets.
It is never too late to get back on track. Being financially sound is one of the greatest stress relievers.