Saturday, 20 January 2018

How have our financial perspective changed over the years?

My wife and I were chatting about our childhood days and somehow this led to a conversation on how our finance perspectives have changed over the years.

Measuring wealth by the weight of piggy bank !
Going back to my primary school days, the measurement of my wealth was initially by the weight of my piggy bank rather than by conventional numerical digits. Then, my father would give me a $1 coin every day for my pocket money and at the end of the day, I would drop all the coins into my piggy bank which is really just a plastic cylindrical can. It brought me tremendous joy upon hearing the echo of the coins as they dropped in. After that I would hold the can in my hands to feel the difference in weight. Every slight increase in weight made me feel richer as days went by. After the can has been filled up, I would proudly declare to my parents that it was time for them to get me another piggy bank.

Learning to earn “free money” !
It was not long before the national bank came to our school to help young students open a bank account. My “wealth” was suddenly transformed into a small and thin book. It was depressing at the start. However, I soon found out, to great joy, that the bank system would make a mistake at the end of every year by sending me “free money”. At that time, it did not make sense why somebody would give out money for free so I was pretty certain that it was a mistake on their part. Nevertheless, I don’t really care as long as my “free money” comes in every year. It was only later on that I realised the “free money” is in fact bank interest that I had “earned” by putting money in my bank account. The thought of more money coming in motivated me to save even more. You could say that this was the start of my investment journey.

Learning the “Art of Financial Prudence”!
At the start of my secondary school days, I began a serious negotiation for a “pay rise” with my parents. When asked about the amount needed, I confidently replied “$2”. Deal! This negotiation felt like a coup as my pocket money suddenly doubled. Interestingly, I became even more cautious of my spending after that. Soon, I found myself drinking more from the water cooler instead of buying soft drinks. I also began to target the more “value-for-money” food stalls. When my parents saw that I was prudent in my spending, they trusted me with more pocket money which increased my wealth further. So this was the “Art of Financial Prudence”!

Looking for Value-For-Money !
I started to socialise more in the 2nd half of my teenage years. Expenses started to rise while my income (pocket money) remained stagnant. Negotiation with my parents for a “pay rise” failed. This was the time when many of my classmates started to wear more branded items such as Ripcurl, Stussy, Nike etc. Many times, I almost succumbed to peer pressure. Somehow I resisted the urge to touch my bank account and instead, decided to be more creative with my limited budget such as buying things that look more expensive than it seems (but never illegal goods!!). My teenage experiences helped to build up my mental resilience and more importantly, shaped my belief in buying only “value-for-money” items. Even better is when the quality item comes at a price that is way below its value. This was the same philosophy that I adopt for my investment now.

Strong Family Finance to retire together !
My views on finance has changed ever since I got together with my ex-girlfriend-now-wife. The key shift is in perspective, from an individual (I) to family view (we). This is why we decided to share about our 3 tips on building a happy family financial relationship in our earlier post. In essence, we wanted to build a strong family finance so that we can retire well together and spend time doing the things that we love.

I hope you enjoyed my sharing and would love to hear how your financial perspectives changed with time!

Related Posts
3 Tips on building a Happy Family Finance Relationship

Sunday, 7 January 2018

3 Tips to build a Happy Family Finance Relationship

Everyone has different styles in managing their finances. So, is it possible for a couple to use finance as a way to strengthen the family relationship? Well, through our own experience, we hope to share with you the 3 tips to build a happy family finance relationship:

Listen more, Understand better, Involve each other

The key to a successful relationship is active listening. This means to listen and fully understand the other party before giving our own 2-cents worth of thoughts. In order to be on the same page and develop a happy family finance relationship, we should always strive to understand each other’s expectations and perspective towards finance. In our case, I used to assume that my wife was not keen to listen to my views on investment and finance. But I soon realised that I was wrong. I gradually found out that all my wife had wished for, was for me to bring her into my financial chain of thoughts instead of just sharing with her the outcome of my analysis. Basically I should get her more involved in the financial planning phase. It was only when we thoroughly understood each other’s financial expectations that we were able to have very frank conversations about how to move our family finances forward. From then, we finally came up with common financial goals to work towards together. As the saying goes: happy wife, happy life :)

Simplicity is bliss

Sometimes, the greatest joy can be attained with the simplest of things. When it comes to cooking, my wife and I always look out for value-for-money ingredients and then put our creativity into use by coming up with different interesting and varied dishes. This “joint venture” in cooking has certainly brought much joy into our lives. Similarly, rather than going for movies or visiting places with admission fees, we usually choose to get closer to nature (e.g parks and beaches) or spend our time together in the museum. The key thing for both of us is to be able to spend quality time together doing things that we enjoy, without burning a hole through our pockets in the process. Being financially prudent does not mean that we cannot live and enjoy life to its fullest.

Create a joint family financial record!

Are you at a loss as to how to monitor the progress of your family financial goals and to plan the cashflow to address future needs?

Well, if you have attained success with the first tip (Listen more, Understand better, Involve each other), the next step could be to think about creating a joint family financial record. To those who are new to this term, a family financial record might sound complicated. However, there is no fixed formula to adhere to for this type of record and it could be a simple one that caters to the needs of the couple. For instance, some couples might want to just keep track of their income and expenses at regular intervals while others might want to note down key family expenses so as to ensure there is sufficient funds set aside. It all boils down to what the couple wish to achieve from this joint effort.

You might be wondering what the benefits of going through all the trouble are. Well, a joint record helped us to create financial transparency and thus built greater trust and strengthened the bond between us. Furthermore, a joint financial record will often result in both parties having a shared responsibility in keeping track of the family finances. Finally, this record can also be used as a reference point to build towards shared family financial goals. No more financial shocks at the end of the month! J

I hope our 3 tips have been useful to you. Feel free to share with us your tips and experiences too!

Mr & Mrs GoHuat

Monday, 1 January 2018

Looking back at 2017 & setting Family Finance resolutions for 2018!

I hope everyone out there have already set your resolutions for the New Year?? After all the excitement of setting them, we usually find it challenging to keep track especially when our busy schedule takes control. Let us take a look at how our family finance performed in 2017 and our target for 2018:
We saved 57% of our total annual income from salary, 7% more than our target. Despite an increase in the number of overseas travels, we managed to keep our dollars in control with our savvyness. Will elaborate more in future posts. In 2018, we would need to spend more on the purchase of new household items including furnitures, kitchen appliances, as we would be settling into our new house. Based on our cash flow forecast, our expected savings for 2018 should be around 29%. We intend to go for a stretch target of 35%.
Stock Investment
Based on trading gains and stock dividends, our investment rate of return has improved from 3.55% in 2016 to 4.6% in 2017, 0.6% above our 2017 target. We are targeting a rate of return of 5% in 2018.
Emergency Funds & Cash War-chest
Our cash is divided into emergency funds (for urgent needs) and cash war-chest (for investment). In 2017, our emergency funds have expanded from 18 to 24 months of our monthly expenditure. Our war-chest has increased to form 25% of total portfolio and we intend to continue increasing it to at least 30% in 2018. We are also thinking of putting some spare cash into currency, likely Chinese Renminbi, but have not made a decision yet.
Overall, we managed to achieve our 2017 targets. The Singapore stock market has been trading sideways over a range of 3000-3400 this year. We believe 2018 will be a more challenging year for investment and will likely be adopting a more cautious approach for our investments. 
We have reached the end of our first 2018 post. Here, we wish our readers a prosperous and fulfilling 2018! Invest well and may all of you continue to advance towards your financial goals this year!