In nearly 20 years of my school life, I was never given a financial lesson on budgeting, investing or anything relevant to my personal finances. How about you? Were you taught
- How money works in the world?
- How you can earn or make it?
- How you can manages it, invest it and donate it to help others?
Even I am working in the financial industry, my relationship with money is still full of love and hatred. I have learned a great number of financial lessons through trials and errors but some of the greatest financial lessons I learned were just by luck. Here are three of them.
#1 – A Book Which Was Not in the Curriculum
To certain extent, the educational framework shortchanged all of us. Because most of us were taught to pursue a profession instead of living a life.
Maybe you wanted to be a lawyer, a doctor, an engineer or a business owner. Have you ever sat in an algebra class, a chemistry or biology class and wonder, “what kind of real-world benefit is this going to have in my life?”
Different people may have different answers for this question, but the subject of money is undeniably essential. Unlike dissecting a frog or challenging an algebraic question, mastering the concept about money gives you daily benefits.
The first financial book I read was Robert Kiyosaki’s “Rich Dad Poor Dad“.
It was during my first trip to Malaysia with my university friends for “shopping”. I stumbled upon a book store in City Plaza and one of my friends recommended the book to me. Since I did not want to come back home empty-handed, I bought the book for RM15. Turnout it was one of the best investments I have ever made!
It took me quite a while to finish the book as it is in traditional Chinese and vertical printing, but it blew my mind. It gave me the first insight of rich people’s mindsets and planted the idea of building income generating assets for true financial freedom.
I am sure you spend a great deal of your time reading your work related materials, why not just set aside some time to read a financial book. It may not be “Rich Dad Poor Dad“, but I guarantee you that one of the books will change your financial life.
#2 – A Habit Which Was Forced upon Me
In our generation, credit cards, personal loans, and home mortgages have spiralled out of control.
In the past decade, banks have been lowering their requirements to allow more people to have access to their “Singapore Dreams”, but many of these have been built on the debt that they can never pay back.
It is already reported more young professionals are filing for bankruptcy due to their overspending. But more dangerously, many Singaporeans are over-leveraging their properties because they cannot see in the long term how these debts are destroying their future financial lives.
If you read my blog, you know I used to rent a house when everybody was screaming to buy one. Spending the money I don’t have just makes me uncomfortable, even if I can afford it.
But I wasn’t always like that. I used to have to borrow money from friends in my university time because I have spent all my allowance without proper budgeting. Having said that, the real luck I had was that I was not even eligible to own a credit card.
Immediately after my graduation, I joint financial advisory industry. I was classified as “self-employed” and banks did not want to lend money to the first year self-employed. I have later discovered why it was so, but I just had to deal with my financial transactions via an ATM card for 2 years.
Being without a credit card nurtured a good money habit in me because I had to spend within my means at all times (not even a 0% interest instalment plan). As a result, even after I obtained credit cards subsequently, I just treated the cards as a mode of payment and I have always paid the balance in full every single month.
The financial lesson that I learned was that money habits are more important than money knowledge, and a good money habit can keep you out of financial troubles.
#3 – A Forex Trading Lesson Which Was Not Expected
Like many fellow Singaporeans, I embarked on the Forex Trading journey by attending free seminars. Although this path never worked for me, I had the luck to learn some very important concepts about money and currency exchange.
Here is the financial lesson: you don’t have to be a daily trader to take advantage of the foreign exchange market. Singapore is an international city and we deal with all types of currencies here. Nearly all of us change Singapore dollars to Malaysia ringgit sometimes for shopping in Malaysia. (That reminds me of my first financial book. ^_^)
But more than often, we have to transfer larger amount of money overseas.
- You may need to buy something online from Amazon or Taobao
- You may need to convert money to British Pound for your London property purchase
- You may need to send money to Australia for your children’s overseas study.
Every time you travel overseas or make overseas purchases, you need to exchange your money into a foreign currency, and you are participating in the foreign exchange market.
So since you have to deal with foreign exchange more than you think, you need to avoid some basic mistakes.
For example, one of the biggest mistakes that you can make is to convert your money through the bank, especially for the large sum. The bank typically charges you exorbitant fees via “spread” and doing so will only cost much more than you have to. You should always check out money transfer companies and use them effectively.
Financial lessons are vital
Today’s financial world is fascinating and challenging to everybody.
- We have been raised to spend more than we have by having assess to our future earnings
- The banking and financial systems are more complicated, more fragile and more difficult to understand
- The competition to make money through investment is more fierce than ever.
The key to be financially successful is to master one financial lesson that has been taught since ancient civilization:
Spend less than you earn and Invest the balance
I hope this article encourages you to consciously learn more financial lessons. These lessons may never be taught to you in classroom but they do help you make more intelligent financial decisions in your life.
What are the greatest financial lessons that you have learned before? I would like to learn from you too. Simple comment below to share your experiences.