Many people want to attain financial freedom, but most have little to no idea what it takes to get there. In today’s post, I will be sharing the 10 key financial milestones that every Singaporean should be looking forward to, and it be a good chance for you to see how many you have achieved!
First things first…
Before one goes marching along the road of financial success, he has to get his house in order. Put it another way, he has to have a clean, honest audit of the current state of his financial health.
Also, the road to financial freedom is marked by progress. Overtime, as the person attains more and more milestones, he gets closer to his goal.
Some of these milestones are very critical; they can cause you to lose wealth in the future if they are not dealt with right now. Amassing wealth is great, but another key activity is preservation of wealth, which we are going to discuss in detail.
Here are 10 things that financial milestones that are often missed out in most people’s financial planning:
#1 HAVE A CLEAN CREDIT HISTORY
Paying personal bills on time is a great chore for many. However, the financially-free person has to attain mastery of this.
It’s quite simple really; don’t buy what is beyond you now. I’ve heard of startup founders who slept in basements to save on rent, bunking in with 4 other like-minded nerds who didn’t mind the initial shame for the future glory.
For many of us, truth be told, we are financially far-more secure. Even if we have debts, most middle-class families are able to get by and secure some savings each month.
Easier said than done; don’t spend what you don’t have.
Of course, business loans do not count, because they are much larger than personal loans.
Have you done a thorough audit of your personal debts? Getting a good credit rating is one big green tick on your financial health. Pay all your bills on time, avoid penalty fees, fines, and you can get a higher credit score on the CCRIS.
#2 LEARN THE SKILL OF BUDGETING
Before wealth is massed, one must learn how to manage small amounts of money. If he can be entrusted with little, he will be entrusted with much.
Budgeting is a simple skill, but truth be told, people don’t keep to their budgets. They adjust their budgets like their exercise schedule, their weight-loss plan, their study plan, and whatnot.
Budgeting without keeping to the budget makes budgeting useless.
The ability to keep to your budget is part of the skill of budgeting. No point having a great budgeting plan, but no resolve to get down to it. And you only have yourself to blame is you are unable to abide by your budget.
Parents have to instruct their children in this regard. If budgeting is taught to people when they are young, the attitude remains, and even when the amount of money gets bigger, the discipline keeps the person financially healthy over the long-run.
#3 BE A PROFESSIONAL TIME-INVESTOR
WRONG question to ask: “I have $10,000. What should I invest in?”
Anyone who asks this question is out of his mind. It’s not what you invest in; the correct question to ask should be “What skills should I acquire to become a proficient investor?”
Time is all you need to acquire skills. Many people complain about the lack of solid financially education in schools, but they remain at the complain stage. Being a professional investor of money requires you to first be a professional investor of your own time.
If you spend most of your time watching YouTube, great. If it makes you happy, great. But if that’s not what you want, do something about it.
Even after trading for many years, I make it a point to read good books, and stimulate my thoughts. They can be self-help books, trading-related books, or even fiction. You’ll be surprised how much you can learn from good, beefy fiction books!
#4 BE FINANCIALLY-INDEPENDENT
If you are still living off your parents, it’s ok. It’s nothing to be ashamed of, for all of us start that way. But you have to have a plan to get financially independent, where your livelihood is no longer dependent on who gives you money.
Many young people are truthfully still holding on to the security that their parents will save them if they mess up. That can be true, and no parent would want their child to suffer financial catastrophes. However, we all need to come to a place where we take responsibility for our finances, and keep track of where we are.
#5 ADEQUATE INSURANCE COVERAGE
As a responsible adult, your job is to not just protect yourself financially, but also the lives of those you love. You cannot compromise on insurance, because your life does not revolve around you alone.
Having a solid financial backing when something tragic happens will show your financial responsibility. It demonstrates that you have a clear plan for emergencies and know how to respond.
Investment-linked policies, in my opinion, aren’t really investments. Like I said above, invest your time, not in insurance policies. Take up the necessary protection, and that’s all you need. It gives you a peace of mind. You’ll be surprised by how uninformed most people are about insurance, and this is one key milestone that will set you apart from many others.
#6 HAVE AN ACTIVE PLAN TO KEEP YOURSELF FIT
Many people don’t even consider physical fitness as a key financial milestone. For what use is it to gain all the wealth you want, yet be unable to enjoy it?
Keeping fit is simple, but difficult to do.
Just like budgeting, many people know what to do, but don’t do it. Get yourself in shape if you want your financial health to be in shape.
#7 OWN THE ROOF OVER YOUR HEAD
Although there are stories of young people who’ve made it big, purchased a mansion with the $150 million they got from selling a company, most people don’t have that luxury.
The majority of young people work their way to owning their first house, before getting anywhere major in life. When it comes to financial freedom, owning the roof over your head is the least you could do, because when an emergency strikes, you won’t be forced on the streets.
#8 MONITOR YOUR ACTIVE AND PASSIVE INCOME
Financial freedom involves having active and passive income. Monitoring them every 3 months or so is a good way to keep yourself up to date with your progress. It also gives a reality check every few months so that you won’t end up skiving.
A simple excel sheet will do the job. It’s just as easy as monitoring your expenses; most simple apps on the Apple Store of Android Store would do fine. It’s the discipline in keeping the routine that needs to be drilled in.
#9 KEEP 6 MONTHS OF EXPENSES IN CASH
Another defensive safety net; if you don’t even have a 6-month warchest, don’t even think about attaining financial freedom. It takes lots of effort and risk to achieve the goals that you want to set out, and the last thing you want to be worried about is whether there is bread on the table or milk in the fridge.
#10 MEET INVESTORS REGULARLY
If you are a pokemon card game fan, you probably spend most of your time around fellow pokemon addicts. That’s fine if you want to be Ash Ketchum, but if you want to be an investor, hang out around real investors.
Go to events, meet like-minded people, network like crazy, and find out what the scene is like. Know what is trending, what is out-dated, what people are interested in, and by spending time with these people, you will be in sync with the world of investments, and this expands your thinking greatly.
For example, when I first heard of options, it blew my mind; you can actually make money when prices do not move. You don’t have to bet on a rise or a fall; you simply collect premium. I won’t go into much detail, but this opened my mind when I was much younger, and kept me hungry to learn and explore.
Many people fall into a comfort zone once they reach their 30s-40s. It’s normal because the trials of life and the painfulness of toil takes a hit on people, but if you really want that fulfilling life you have, you got to step out and behave like you are going to live a fulfilling life.
Here’s a useful quote for those who are just starting out in the investment community:
If you’re 25, behave like you’re 35. Be mature, sensitive, patient, and be kind in your dealings with people.
On the other hand, if you are a seasoned veteran in your are of expertise, here’s a quote for you.
If you’re 55, behave like you’re 35. Be excited, passionate, willing to change, and accept young people for who they are.
In the past, I was criticized for spending too much time on my phone. Guess what? I now spend most of my time on the phone trading and analyzing charts, and I’m not confined to a desk in an office in Raffles Place. The things which society didn’t really accept, can actually become mainstream in a very short time.
WHAT’S YOUR DECISION?
If you’re going to make any headway in the path to financial freedom, it had better start today. Make a plan. Go to your drawing board. Stop complaining about the past, and live a life of possibilities. Don’t know where to start? Look for help. Ask, learn, and seek.
But first, make sure you’ve got these 10 financial milestones set up. Of course, you could forgo a few initially, but to be really stable, you’ve got to build up your foundation very strong.
When the storm comes, would your financial house stand strong?
Here’s to a great month ahead, cheers! 😀