The Lesson in Managing Money — What I learnt when I lost my job?
Keywords: sustainable, save before spending, save strategically, save to invest, grow value
By Lauren Lau Yee Shian
“Kai yuan jie liu” is a well-known idiom in the Chinese culture. It is about managing money, a focus on broadening sources of income and reducing expenditure. There must be a reason of why broadening income sources (“kai yuan”) is placed before reducing expenses (“jie liu”), I instinctually thought when I pondered on this phrase. So, I have always believed that making more money is what really mattered, and unwittingly I neglected the importance of saving.
I realized that my mindset was wrong when I lost my first job after working for 2 years and because I didn’t bother with saving, I obviously didn’t have much money. I then had 2 car accidents which cost me thousands to fix.. To further compound the issues, I had a lengthy “Job Hunt” period that lasted 6 months. And here I thought that fresh graduates get a job within a month. Oh, how wrong I was.
“Arghhh… How could I also forget to save money before all these unexpected emergencies hit me?” You are probably thinking, how is it possible that this person saves nothing after 2 years of working. I feel you. Believe me, I was utterly despondent.
It was a terribly difficult time; my savings ran out not long after paying my monthly fixed expenses and study loan. I had to borrow money from my parents for months until my next income came in. That completely blew my finances as I went into larger and larger debts. At this rate, I will take forever to achieve my financial independence. Lesson learnt indeed.
So, what do you need to know before starting to save?
First, set aside the biggest portion possible from every monthly income for your emergency fund so that you could sustain at least ‘6 months of no income”. This is a priority, starting from one third of your monthly income if possible.
Second, consult someone who does well in their financial management or professionals to get advice for your money management.
Third, draw up your own saving plan and stick to it no matter what. After saving a considerable amount of emergency fund, do not touch it! Take the next step— use the savings to grow their value overtime. You simply must grow your money. There is more to learn about growing your money’s value — stay tuned with FinAIMS to find out more!
Since this awful experience, I thought I had better surround myself with financially savvy people. Why not make a career out of ensuring people never experience what I did. Today, as a Personal Financial Consultant, I would still regret sometimes: “if only I could learn these lessons much earlier!”. If you too think the same way I did, cheer up and believe that it is never too late!
Talk to me at firstname.lastname@example.org. I would love to hear from you.
Act Today Own Tomorrow.