Being Financially Prepared in Life
Published 31 March 2023. Contributed by Credit Bureau Singapore.
Our simple daily needs and wants may change from day to day but as we mature along the years, we often notice a drastic shift in our overall financial goals and priorities through the different phases of life – starting from a fresh graduate, to a seasoned worker and all the way till retirement.
More importantly we have to learn to anticipate a rise in expenditures and adjust our budget planning as we take up more roles and responsibilities along the way. Commonly as we see a growth in our income, we want to develop a bigger appetite of wealth to feed our high ambitions and to sustain this new higher standard of living.
Using the reference from the 5 stages of career development, this article sets out to give you a reference of how you can set your own financial goals in accordance to the different stages.
- Exploration – early 20’s
This is the pre-employment phase whereby you are receptive to taking in various advices or references from the people around you. You also uses your previous part-time working experiences to give you a rough gauge on the kind of industry you would like to step foot into. This is a beginner start to set a short-term financial goal and how you intend to achieve it after you have secured your first full-time job.
- Establishment – mid 20’s to 30’s
The second phase begins with the start of your first full-time job followed by a steady stream of monthly income. During this phase, you may experience many new situations and people who will help you to settle into your role faster and develop new skills along the way. This is also the best period to start your first savings account to focus on growing a sturdy base of money by growing recurring interests. You will also develop an interest in applying for credit facilities like Credit Cards that allow you to pay on credit terms yet earn returns on your material expenditures.
- Mid-career – 30’s to 40’s
The third phase happens when you have progressed from a newbie to a seasoned worker. At this point onwards, you would have experienced some career progression and a growth in your overall income as compared to when you have first started out as a fresh. You will also be more confident to expand your portfolio investments through low-risk investment products such as Fixed Deposits, Unit Trusts and Bonds. Also, you will be keener to understand further on expanding your insurance coverage to your expanded family members or apply for an endowment plan to protect yourself and your family from uncertainties. With this major increased in responsibilities and commitment, you will prioritize most of your income to pay off essential items such as your wedding, mortgage loans, insurance or investment accounts.
- Late-career –40’s to 50’s
The fourth phase is more relaxed as you would have established a steady and firm career base. You are more or less settled down in your current role and you remained satisfied yet still feeling rewarded. You should already have a steady stream of passive income on top of your full-time job as you reap the fruits of your labour from all your steady investment returns. You would have already paid off most of your loans hence you have more flexibility to spend more on material goods such as family vacations, club membership and luxury shopping. You will also be prepared to incur additional costs such as more health check-up appointments or funding of your children’s educational fees.
The last stage is when you have decided that it is the best time for retirement. Bearing in mind on the loss of most of your full-time job income, you are well-prepared as you are still receiving a steady stream of return from your investments products. You also expect to receive encashment of your endowment plan, leaving you with a big pile of cash to cover your personal expenses for the remaining years of retirement.
Check your credit report
Here is another word of advice, remember to check your credit report from time to time as maintaining a good credit reputation is important especially when you have a need to purchase big ticket items. Credit providers will check on your credit report before extending out a loan to you and the consequences to having a poor credit report can be dire. Should your loan application be rejected, you will have to seek for alternative means for additional funds which might also mean that you will have to consider re-planning your finances, possibly delaying your future goals or even building your wealth.
All in all, we own our own timeline and our journey is unique to each and every one of us. The definition of happiness and success should be self-determined and not through comparison with others. Also, be sure follow and like our Facebook page @creditbureausingapore for more useful content and tips to maintain a good credit reputation!