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. Somehow I feel the education system never want us to achieve financial freedom.

How about you? Were you taught

  • How was money generated in the first place?
  • Why $1,000 is worth $1,000?
  • Is it better to own cash or real estate?

Young boy, counting money and taking notes

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.

I would like to share with you three important financial lessons. Looking back, I really appreciate how fortunate I was to realize these concepts earlier, without which I will take longer in my journey to financial freedom.

#1 – A financial freedom book which was not in the curriculum

To a 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 to this question, but the subject of money is undeniably essential. Unlike dissecting a frog or challenging an algebraic question, mastering the concept of 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 bookstore 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 the book was one of the best investments I have ever made!

rich-dad-poor-dad-book
My first “Rich Dad Poor Dad” book – a Taiwanese edition in traditional Chinese and vertical printing

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 budgeting 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 how these debts are destroying their future financial lives.

leverage-unbalanced

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 during 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 – An investment lesson which was low cost

Like many fellow Singaporeans, I embarked on the investment journey by attending free seminars. At the time, SGX was promoting a 2-day course. and it was funded by IBF.

Lucky for me, I didn’t attend my first course and paying $4,000 (a lot of people did). What I had was my first touch on trend investing in the first 3 hours of the course. The course was conducted by a seasoned Forex trader, who made a living by investing his own money.

Frankly speaking, the rest of the one and half day was just a waste of time, especially the last session which was conducted by a “quantitative researcher”.

Background made of different currencies banknotes - pile of money

The only thing that I learned, trend following, becomes the backbone of my Global Momentum Compass investment portfolio which I developed subsequently.

I learned a few things from this experience:

  • You don’t have to spend a lot of money to learn to invest
  • Most of the things you spend the time to “learn” are useless to you in the future, so be picky
  • A quick lesson from a person who is an investor himself is 10 times more beneficial than what you learn from an investing textbook

Financial lessons are vital to financial freedom

Today’s financial world is fascinating and challenging to everybody.

  • We have been raised to spend more than we have by using 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 achieve financial freedom is to open your mind and be receptive to new ideas and information.

I hope this article encourages you to consciously learn more financial lessons. These lessons may never be taught to you in a 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.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

  • {"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
    >