After spending a good number of years working, I think it would be good for me to share some of the financial mistakes I made while I was younger a.k.a things I wished someone has told me when I first entered the workforce.
Not saving enough
I came from the YOLO generation where happiness and instant gratifications were prioritized over boring habits like savings. There were a number of years where I barely saved up any of my income every month, choosing instead to spend most of my money on clubbing and social activities like going out with friends. If I could do it all again, I would choose instead to save aggressively at the start of my career – putting aside at least 50% of my take home to build a large enough nest to invest in the later stage of my life.
Not investing early enough
I’m sure you have heard of the magic of compounding interest and how putting your money in a savings account at a bank is the silliest thing you can do for your money. And unfortunately, both of them are true. Most saving accounts in banks pay you a ridiculously low-interest rate of around 0.05%. And with the inflation rate at 3.2% in 2021, you are losing 3.15% of your money every year by putting your money in the bank.
The silver lining is that there are more savings plans now that give you higher interest rates (though you need to bank more with the bank and also have a minimum deposit amount) and apps like SYFE and Endowus are taking the guesswork out of investing your money.
Not investing my CPF
If you just started working, chances are, your older colleagues (or even your parents) would tell you that your CPF is money you are never going to see for a very long time. Some might even say you might not live long enough to withdraw your CPF with the retirement and re-employment age being increased almost every other year. But that shouldn’t deter you from really growing your CPF funds – first by contributing monthly to your CPF, and second my investing in your Supplementary Retirement Scheme (SRS).
