Today one is spoilt for choice when it comes to sites catering to personal finance.
Make no mistake, there are tonnes of them out there. And most of them seem to focus on a particular theme: How Singaporeans can save money while spending money.
Some will expound the many virtues of having a stack of credit cards – one for every occasion, every culinary venue.
Others will teach you the best spots to park – you can save money just by changing your parking lot!
There are those will also tell you about airline offers, hotel discounts, how to travel on a budget etc etc. (“12 Day trip to Disney Land under $3K”)
Is this Personal Finance?
In my mind, personal finance is about teaching people how best to manage their finances, how to sort out their financial priorities, and about financial literacy in general.
But now the hot topics seem to be centred around how to save money.
Sure, all these are valid methods of saving money, and there is nothing wrong with saving money. We avoid wastage as much as we can.
But if personal finance now means how best to save money by using the right credit card, by choosing the right parking lot, by using hotel discounts and travel perks, then I think we have put the cart in front of the horse.
The cornerstone of Personal Finance should be, first and foremost, how to protect your wealth and secure your income. Once that is done, then we can go on to talk about how to stretch your dollar, and then go on to discuss about the right investments that will make you a millionaire.
But protection comes first, not last. To find out why, lets just follow the story of a typical Singaporean called Steven.
Steven the Super Saver
Steven is your average Joe (we should have just called him Joe!) when it comes to finances. He can add and subtract, he knows to pay credit card bills in full, and never risks his hard earned cash when he is near Marina Bay Sands. So far so good.
But wait, Steven is an avid follower of several finance sites in Singapore. He is intrigued at the content they churn out.
He reads the post on dining perks and how different credit cards give the best discounts. (The 4th person dines for free? I mean, WOW)
He discovers a few great places to park in Orchard. (I’ve been a sucker to stick to Ngee Ann City, it seems.)
He comes across some great staycation deals. (I thought bumming around in your own neighbourhood should be called bumming around in your own neighbourhood, but a staycation sounds way cooler.)
Here’s how his personal finance improves, assuming he follows these tips and deals regularly, throughout the year.
Carpark savings: $10 a week, $40 dollars a month, $480 a year
Dining Perks: An average of 10% savings, and assuming he spends $400 a month in restaurants, he then saves $480 a year
Travel/Airfare savings: He gets to know of deals and tips that save him $500 a year.
Total savings of $1460 a year, we can round it up to $2000 per annum. (There are link points, frequent flier miles, credit card rewards etc to be claimed)
From age 26 till age 65, Steven thus saves a grand total of… $80,000.
Whats wrong with saving $80,000 throughout your working life?
But Steven didn’t read about having protection and insurance cover first.
At age 65, Steven contracts cancer. A conservative estimate for treatment starts at $100k. (people have sold their flats to raise this kind of money.)
His whole life of saving on car parks, swapping out credit cards at different establishments, and chasing travel deals comes to naught.
And he is about $20,000 down in the hole.
Personal Finance is about setting your Priorities straight
Its not about how much you earn, but rather how you spend it that determines your station in life
Perhaps you can begin to see why I have a beef with the finance sites of today.
They advocate more of a “save big bucks by spending even bigger bucks” mentality, like how you might spend alot more money in a “sale” than you would normally. (How else would you be able to capitalize on dining or travel deals?)
Protection is boring, I get it.
There are more eyeballs to be gained by writing about fantastic Bali and how to stay in a villa there under a hundred dollars.
Insurance, on the other hand, puts people to sleep. (the restorative kind, not the euthanizing kind)
Ok lah, you’ve made your point. What next?
I think Grandma summed it up nicely for me: First things first.
I’m happy to have said my peace.
The question is, what then, will you focus on first?
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