A quick word on adulting so you don’t make the same money mistakes I did

I can’t turn back time, but you can certainly still make the best of yours.

| Daniel Ho | Sponsored | March 29, 2022, 12:21 PM

If you are reading this, it is likely that you are finding adulting harder than you had thought.

Aside from having to spend more than two-thirds of your waking hours at your job, you are expected to take charge of your own future, pay a bunch of expenses, and manage your own finances.

This includes stuff that costs more than you could ever imagine. Like angpows for your friends’ weddings, your own wedding, rent (or a home loan), bills, and insurance premiums.

It doesn’t help that some of us still have massive student loans to clear, or that some of our parents may be expecting a generous living allowance.

If that’s you, I completely empathise.

Back when I was your age

I had my first job when I was 25. The uncertain labour market, coupled with a longstanding inferiority complex, meant I rushed into accepting one of the very first roles I was offered.

Not that there is anything wrong with this “take first and make the most of it” mentality. After all, the circumstances one finds oneself in are unique, and even the most experienced gurus out there can’t lay claim to knowing necessarily what the “right” choice will be.

I share this not to dissuade you from accepting your next job offer, but because looking back I think my hastiness at the time was not too different from many young persons’ frame of mind, and marked the start of some less-than-wise decisions in the years that followed.

On spending, and mistaking ‘can’ for ‘should’

Mistake number one.

Several months into my first job, I was doing well and even received an unexpected promotion and pay raise. Shiok, I thought. Can finally start living a proper corporatesque lifestyle to make up for all the scrimping and saving I had to suffer as a poor student.

My partner and I had little need to, but we would frequent mid-range restaurants in the CBD (where I worked) because we now could. Which means high-end prices since, surprise, it’s the CBD.

I must also admit - we were at an intermediate stage in our relationship, and I kind of wanted to show her that I was ready to settle down and could provide more than just an “okay” kinda life.

Familiar narrative? Touch your heart.

To be clear, there’s nothing wrong with spending on good food. But, you see, I’m poor at keeping track of numbers, and eight years ago financial apps weren’t really a thing, so I had no clue as to whether what I thought we could afford was indeed what we should be spending on so frequently.

At one point, I reckon I was blowing half my monthly paycheck on fancy meals, though in my mind it seemed perfectly fine since my bank account wasn’t exactly depleting.

In any case, having done just fine (or so I thought) with meal expenses and having amassed several months of savings, I began to think about what else to do with it.

This leads me to mistake number two.

My first investment, and a lesson involving eggs and baskets

I made my first ever investment in 2015. It involved S$5,000 that a friend of mine persuaded me to put into an investment holding company that focused on healthcare and energy.

Said-friend-who-shall-not-be-named is one of the most street-wise people I know. He has a degree in economics and finance, versus yours truly who knew absolutely zilch about investing at the time, so there really was little to argue with him about.

His advanced financial modeling skills (I kid, he used nothing but his gut) predicted that this investment would ride a once-in-a-lifetime wave up to the moon. And up it went, but only for a couple months before crashing back down to earth. (Status check: It has not recovered since.)

Chart of the actual stock, with ticker omitted so I don’t embarrass myself.

Another friend - with the benefit of hindsight of course - chided me: “See lah, why do you put all your eggs in one basket?”

What he meant was that as someone new to investing, I should diversify my risk, that is proverbially to have several different types of eggs and spread them across several different baskets.

He recommended that I begin with a regular savings plan (or ‘RSP’), easily accessible via most major banks, and customise it according to my goals and needs.

I began investing a very manageable S$100 a month, have been doing so ever since, and have thankfully not lost any money (what I’ve invested has in fact grown decently).

Anyway, back to the S$5,000 that evaporated almost overnight. Small price to pay for a rookie mistake, some may say.

Let’s fast-forward to bigger things then.

Keep it simple, don’t geh kiang (‘fake smart’ in Hokkien)

I’ll preface this by acknowledging that young people nowadays are probably much savvier when it comes to sourcing and getting the best deals.

I have young friends with unparalleled mastery of credit card “hacks”, who, for some reason, seem to always get hold of 12.12-level deals even when it’s not 12.12, and who frequently manage to go on 5-star hotel staycations at budget cost.

A year before my wedding, in anticipation of multiple big-ticket purchases, I decided to get my first credit cards.

In this age of card comparison websites and user-generated reviews, you would think it is easy to conduct your own research and come to an informed decision on which card is best for you. Which is exactly what I did.

Unfortunately, doing so is akin to browsing online shopping sites on Black Friday. Deals abound, which essentially means you are constantly bombarded with marketing and promotions.

Anyway, I ended up signing up for five credit cards over the course of several months, thinking that by using different cards for different purchases I could “diversify” (recall baskets and eggs story above?) and get the best of everything.

Alas, when I got to my third credit card I started defaulting on some of my monthly payments. Not because I overspent or could not afford to pay, but by complete accident - I simply lost track of the payment deadlines.

Now, when you’ve made big purchases and defaulted on your credit card payments, it is no laughing matter. It is not uncommon for credit card providers to impose per-annum interest in excess of 25 per cent, which on a per-month basis far exceeds whatever cashback or rewards you might be getting.

Want to save money → geh kiang thought can D.I.Y. → got sold on all the deals → couldn’t keep track → incurred hefty interest payments. Ownself create stress for nothing.

In summary, minimise stress

At the end of the day, money isn’t everything and it certainly shouldn’t become everything.

This is not to say that one ought not to aspire to financial independence, but if the cost of achieving financial independence is headaches, sleepless nights, and irritability towards your loved ones, what’s the point, really?

Unless you are a finance professional who can approach every adulting decision with utmost precision, my unembellished advice is to keep things simple, or at least at a level you find manageable.

Taking a leaf out of my book, if you struggle to keep track of half dozen credit cards, consider narrowing down to one or two so no bills are missed and no interest payments are incurred. And seriously consider setting payment controls to ensure security, and so you never have to worry about “accidentally” overspending.

In addition, if I could turn back time, I see tremendous value in working with a trusted partner, at least at the very beginning of your journey. After all, since many “adulting” milestones take place just once in a lifetime, don’t we all wish we’d emerge with positive experiences to share?

Get your ‘firsts’ right with DBS

Whether you are planning your finances for the first time, embarking on your first job, travelling for the first time, buying your first home, making your first investment, or having your first child, our trusty friends at DBS Bank understand the financial uncertainties that come along with these adulting milestones and have created some useful tools and resources to help minimise your stress.

Looking for a home loan? Use the loan calculator. Want to invest? Browse ideas for easy first investments. Instead of having to worry about who to turn to each time you encounter a new challenge, with DBS digibank, you can open a salary account, apply for a credit card or housing loan, browse and decide on insurance policies, or even track and plan your finances - all through a single, easy-to-use platform.

Remember, without the right help, money matters can often get needlessly complicated, so keep things simple, find yourself a reliable financial partner, and the less stressful your journey towards adulthood will be.

This sponsored article for DBS Bank made our writer realise the importance of having reliable partners in one’s adulting journey.

All images via Unsplash.