I’ve a friend who teeters on the edge of financial disaster. At 35, he’s got no health insurance, lives paycheck to paycheck – and recently committed to a car that’s way out of his means.
One common clapback he quips whenever I make suggestions to tweak his lifestyle, goes along the lines of this.
“It’s my life, so just let me do what I want!”
Well, that’s where we disagree.
Look, you might think personal finance only affects you. But the truth be told, managing your finances is one of the ways you can make society better.
Don’t believe us? Here are some examples.
Climate Change: Your spending habits directly affect the environment
Here’s a shocker – Singaporeans are one of the most wasteful people on the planet.
Turns out, for all those Earth Hour campaigns, all the metal straws and the singing of Save My World, we’re not exactly a very eco-friendly nation.
Off the top of our heads, here are some ways keeping your spending in check can help you become sustainable.
Don’t buy a car. Whether they’re electrical vehicles or not, cars are energy guzzlers. By the time a car hits the road, manufacturing it would already have consumed considerable energy. Towards the end of its service, plastics, chemicals will be the cause of major environmental headaches.
Did we mention that it also consumes considerable energy while you operate it?
Fly less. Frequent air travel (when it was around) was fun, but objectively disastrous for the planet. Yes, currently air travel contributes to about 2.5% in carbon emissions. However, this is based on a small portion (5-10) of the world’s population flying often.
Stop normalising consumerism and throwaway culture. Dislike seeing sea turtles choking on plastic? Then you might wanna cut down on the taobao or one of those ubiquitous same day sales. (1.1, 2.2, 10.10, 11,11 etc). Your old electronics end up in landfills, lakes and oceans where they poison the environment.
We are well aware of the argument that goes ‘if everyone doesn’t spend like you, the economy would collapse.’ We’ve heard it enough times.
Perhaps this is true, although the prevailing norm needs more people to spend less, than spend more. Our take is that we will leave the big spending to the people who can actually afford it.
Newsflash – if you are still financially insecure, you cannot afford it.
Vulnerable Groups: The more you have, the more you can help
The following argument is so old, it has appeared in the bible.
Is the impoverished widow who gives her entire net worth far more commendable than the billionaire who donates a million dollars?
The popular narrative, will of course, be in favour of the widow.
In reality, it really depends on what metric you are looking at.
If you are looking at generosity, then yes the widow comes up top. If you are looking at impact, then it’s more likely the billionaire’s contribution will go further.
Our take? Most of us should strive for both generosity and impact – assuming one or the either is a false dichotomy.
Therefore, between two equally generous versions of you – one with $10,000 and one with $1,000,000 – the latter would probably be more helpful to society.
With $1,000,000, you could donate more money, support businesses who provide opportunities for the underprivileged and/or start projects that help a good cause.
Don’t get us wrong, with $10,000, you could also do something, arguably less.
Just to be clear: we’re not saying that money is the only way to help Neither are we saying anything like ‘if you don’t donate a lot of money you are not making an impact.’
Rather, since you should only give what you can afford, then why not work towards being able to afford to give more?
The economy: Consider the ‘dependency ratio’
Improving your earning power via upskilling is not strictly a personal finance decision per se, but it’s worth mentioning because it has broader consequences as well.
If you still remember your (human) geography back from secondary school days, you’d remember this term being related to the aging population problem.
The idea was this: every society relies on the working population to support the non-working population (usually the very young, or the very old.
If the non-working population grows too large, the working population will face high financial stress as well as higher taxes, lower government funds and inequality.
That said, in the throes of the Fourth Industrial Revolution and COVID, age is no longer an important marker of productivity. Without the right skills, you can join the non-working population at 50, 40 or even 30.
Taking all this into consideration, not only should you continuously remain relevant, it’s also important to build a strong financial net.
As you probably already know, upskilling is objectively difficult, particularly if you have many responsibilities (work, family, health) to juggle.
Build wealth, then write the future
The popular narrative amongst youth these days is that the system is rigged, and that we are all just cogs in the wheel. I see where that comes from.
We often feel restless and dissatisfied because we don’t feel like anyone in power is representing our concerns.
In these cases, you might just have to become that power. Earn money, build contacts, have a voice that people will listen to.
In other words, leverage the time you have (because you have lots of this as a young person) to compound into resources and/or influence you can exert.
No one is properly championing the plight of pangolins?
You can do it yourself if you are rich or you can convince investors to pool money and get a reserve.
Don’t get us wrong, righteousness and good arguments are great. But action is equally important.
To effectively be the change you want to see, it helps to be able to exert influence and/or resources. And being valuable to society is the most consistent and flexible way to do that.
Want a better society? Build wealth, then write the future. Be the change you want to see in this world.
Stay Woke, Salaryman
La la land economics
Hi there, must say I agree 100% that one should NOT spend beyond one’s means. And yes, our individual actions and behaviours do have impact on the larger society, and this is where I have a different take on the points you raised.
1. Consuming less.
If everyone consumes less, there will be less economic activity and whole industries could collapse leading to widespread unemployment, much like in a very severe market downturn. Imagine if everyone stops buying cars and instead take public transportation, this chain of events could happen : car manufacturing jobs will disappear, car sales, car servicing and accessories manufacturing jobs will follow suit. Or if everyone makes and bring their own lunch to work, the canteen / hawker centre workers and along with it the people that supply the food ingredients to them will also go.
During bad economic times (recession), people generally cut back on their spending leading to more unemployment. This is the reason why in suc times, governments need to inject liquidity into the system to encourage consumption. And this is where I believe wealthy can do more to help, by spending more!
2. What are we working and saving hard for
We need to be clear what we are working hard and saving hard for. We cannot be working hard and saving money for the sake of money. We work and save (& invest) because we want a better and comfortable life for ourselves and our family. That better and comfortable life could mean living in a nice home (for eg. Condo or landed property), having a car, a maid, dining at restaurants and overseas vacations etc… And remember, our spending does help spur economic activities.
3. Helping the vulnerable
I believe the best way to help the vulnerable is to be NOT one of them. You need to have some wealth to be able to help them. The second best way to help them is to provide them with skills and jobs. For those that are unable to work due to old age or other disabilities, direct charity would be necessary.
Giving vulnerable but able people direct charity robs them of the opportunity, dignity and pride from helping themselves. Direct charity also creates dependency mindset.
And the bottomline is, we need to spend and make the money go around and create demand and jobs
LOL how about the businesses too?