When it comes to wealth accumulation, a lot of Singaporeans spend way too much time on the wrong things – they are obsessed with the small stuff, instead of the big wins.
At the risk of offending other personal finance enthusiasts, we’re going to say the biggest mistake is being Penny-Wise, Pound Foolish.
Hang On, We’re Not Saying The Small Stuff Is Not Important
Look, we’re big on saving money. I trust our audience to know stuff like ‘driving a longer route to avoid ERP’ or ‘don’t buy insurance to save money’ are plain stupid.
However, it’s easy to also get caught up in seemingly ‘intelligent’ discussions as well and become obsessive. For instance, knowing the best savings account and cashback card is great, but spending the bulk of your time keeping up with the changes? Often not worth the effort.
Let’s use the high interest savings accounts as an example:
I’ve been using my trusty OCBC 360 account since 2014. For some context, 360 was the OG saving yield savings account. There was nothing like it when it launched.
Since then, plenty of high savings accounts have been launched. DBS Multiplier and UOB One are probably the ones you hear most about. You can expect that in this competitive space, who offer the best deal often changes.
Instead of moving my money from bank to bank repeatedly, I hung on to my OCBC 360 Account, even though it wasn’t the best choice because the whole process of changing banks and filling forms was just too disruptive, troublesome and time-consuming for me.
You’d expect me to be losing heaps of interest from not choosing the best bank account. But based on $30,000 deposited and my spending habits, this is what I’ll be getting in interest from the three local banks.
DBS Multiplier: $660 (pre Multiplier changes w.e.f Feb 2020)
OCBC 360: $792
UOB OUB: $775 (including a $200 rebate)
Now, the difference between the highest and the lowest figure? $132. Or $11 a month.
Absolutely no reason to lose sleep over.
Interestingly (no pun intended), I’ve had friends contemplate for weeks spending on whether they should be switching banks. In my opinion, the mental load, time and energy just isn’t worth it.
Which brings me to my next point.
Your focus in your 20s and 30s should be on these instead.
Big Win #1 Your Earning Power
This might be the most daunting and challenging thing to focus on, but it’s also honestly the most financially rewarding.
Focus on getting that bump from $2,200 to $3,000. That’s $9,600 a year, btw. Or $3,000 to $4,500. $18,000 a year.
$4,500 to $8,000?
$42,000 a year.
In the grand scheme of things, $132 is chump change. Forget about it. Focus on the big wins. As mentioned before, you can do the following:
- Get a side hustle
- Gun for a promotion
- Learn new skills
- Look for a better job with growth potential
- Find and build a network of like-minded people who want to grow wealth and share ideas.
- Start working as soon as possible instead of taking a qualification that doesn’t justify the cost and opportunity cost.
Big Win #2 The BIG Purchases
Have you heard of the 80/20 rule? I believe 20% of the decisions you make will have the most impact on life. And the biggest purchase decisions you make in your 20s will have more impact on your wealth than the points you have in your GrabRewards.
Some of these are:
The house you buy. Buy a house that’s too big and expensive for you, and you will suffer by overleveraging and limiting your investment potential. Same for reno. There’s no shame in starting off with a smaller home.
Buying a car. Unless it’s used to earn money (i.e you are a property agent who needs to ferry clients around), this will also limit your investment potential. Read why I cycle to work here.
The wedding you have. One perfect wedding day, 5 years in debt. We don’t recommend weddings you cannot afford.
Your lifestyle. More of a combination of all I’ve mentioned above.
Big Win #3 Your Health
The 20s is where we get caught up with work. The 30s and 40s is when we realise that all those years of sitting around on an office chair have taken their toll.
The 50s and 60s is when we pay the price.
Our health is arguably the most important thing we have. And it’s potentially the most expensive thing we spend on.
Trust us, no amount of high-sodium $2 economic beehoon will ever make hypertension worth it. No stressful/high paying job is worth and risking cancer or depression over.
And no company will ever look after you for life because you have a stroke at work.
Cancer and heart disease are Singapore’s biggest killers. Exercise often. Eat healthier.
Don’t make stressful work situations the norm for you.
Big Win #4 Your Relationships And Your Values
Humans are social creatures. Who you spend your life with has a huge impact on defining who you are. And who you are is fucking important.
It’s subtle, but the people you surround yourself with can deeply affect your financial lifestyle.
You might spend money differently because you hang out at different types of places.
You will be influenced by the values they hold dearly; whether they are savvy, steady savers or YOLO advocates.
Friends also give different advice depending on how successful they are in their life/careers.
We’re not saying you should only make friends with rich, successful, woke people. But curate your social circle consciously. It makes a difference.
Because ‘wealth’ isn’t just measured in dollars, but it’s also your network, social capital and the good you bring to society.
Pick your friends wisely.
Pick your partner wisely.
Pick your community wisely.
And stand for something meaningful.
That’s what we believe in anyway. And it has served us well so far.
Stay woke, Salaryman.