Financial planning for Young adults
This stage till age 50s is an eventful period of one’s life, marked by several signification milestones.
Starting work
Must be a great feeling receiving your first pay cheque and at this age, one can be forgiven in splurging into the latest gadgets, designer clothing or clubbing. Prudent money management however is important lest you get lured into spending ahead of your earnings and living the lifestyle that credit card companies promote. Credit card debt is to be avoided at all cost.
With the feeling that the world’s your oyster and invincibility, there’s a tendency to focus on wealth accumulation and excessive risk taking in investments. Contrary, the focus should be on getting adequately insured so that you do not become a financial burden to your parents in the event of an expected accident, disability or illness. Exercising this financial responsibility can be form of filial piety.
Moreover, insuring early in life will help you lock-in the relatively low insurance premiums and your insurability, thereby giving you greater capacity for wealth accumulation as your salary rises.
Getting married
With marriage in mind, it’s important to have a common understanding with your partner on the type of wedding to plan and budget for in advance.
More importantly, it’s encouraged to meet up together with your preferred financial adviser to map out your joint financial needs and provide a plan to address those needs.
Agreement to joint financial goals in terms of protection and wealth accumulation is an essential bedrock for a happy marriage especially if each partner have differing money management habits and priorities.
I often state that the size of the wedding banquet or the size of the diamond ring is of much less importance compared to the size of the insurance plan each partner buys for him or herself because it truely is an act of selfless love for each another – one that will iron clad the marriage vow of “to have and to hold, from this day forward, for better, for worse, for richer, for poorer, in sickness and in health, to love and to cherish, till death do us part.”
Buying a house
Purchasing a house and a car In Singapore is an emotional and financially significant decision – one that can cause you to be in debt for 10-30 years. Hence, do exercise financial prudence in your purchase and weigh it’s impact on your cashflow and other financial planning priorities example, child education planning, retirement planning, insurance planning.
To protect your asset, do consider purchasing a mortgage protection insurance and home insurance covering the building and it’s contents.
Article from Gilbert Koh on Overcoming the Tsunamis in your Life