How many people do you know who struggle with money, who can’t save, who don’t earn enough, who spend too much, or who can’t figure out what to do next with their careers?
We live in a time where majority of people in Singapore are either bogged down by massive student loans, colossal amount of HDB debts and meager starting pay. Before beginning on their financial journey, they have already been given a great disadvantage. I know it is tough to do it alone. Some people have the time, ability and drive to manage all their finances, others don’t. Hence, some people manage a little better than others who simply gave up.
Congratulations for reading till here. It shows that you are one of the responsible individuals who are concerned about your own finances. In the messy internet era where there is no shortage of information, I notice that many self driven individuals take it upon themselves to figure everything out. However, there is information if wrongly believed can make planning very difficult for individuals. This can lead to frustration, anger or even animosity towards the financial planning industry.
What are the common myths of financial planning?
Myth 1: I don’t have a lot of money so I don’t need to plan. You need a lot of money for financial planning.
What would you do, if you have an extra $100,000 in your bank account? Wouldn’t that be nice? But if you actually have no idea what to do with that extra $100,000, then yes, you should really get a financial planner. Most of us would benefit from a financial planner long before that, to help get to the point where we can have an extra $100,000 at all! In the financial excel cheat sheet, we share about how to help people to manage their cashflow so that they can grow their financially freedom fund. The reason why an individual might not have a lot money might be due to poor cashflow management (save more with credit card annual fee waiver, how to save up to 50% when dining with eatigo and aia vitality), a sudden change in life stages or lack of knowledge to increase their wealth (how to maximze your CPF, stock investments). Whether you have a lot of money or little money, it is good to embark on a financial plan.
Myth 2: My premium goes up if I do a claim. Hence, it will be better not to claim from my insurance.
A part of financial planning comes in a form of insurance. financial planning (singapore) will give a clue on how to plan for unforeseen circumstances. I notice that many a times, my friends will tell me they won’t want to buy insurance as the premiums will increase if they do a claim, what’s the use of the insurance then.
There are generally 2 types of insurance. Life insurance and General insurance. Life insurance covers individuals for their life, disability, critical illness, hospitalization, etc. Their premiums are tagged on to the risk pool (example Singapore). Therefore, if the risk of Singaporeans getting hospitalized were to increase, then the premiums will increase. It does not increase with individual claims.
General insurance on the hand covers for car, housing, etc. The riskier the driver (or the more accidents he gets into), the higher the premium. In this situation, yes the premium will go higher.
Myth 3: Having a financial planner means I don’t need to learn anything about investing.
This sends a shiver down my spine every time I hear this. Learning about financial planning is about getting educated. To put it simply, you will do something you don’t understand (at least on freewill). By getting educated on financial planning, you will have a clear goal on what you want and what you want to achieve.
Myth 4: My finances are simple. I can do it alone.
Putting this aside, big companies usually have a team of experts on their board. This is because they gather the best brain in the planet to grow their money even further. A company’s expenses can be as simple as assets, liability and cashflow. The reason all these experts are in the board is use their expertise on taxes management, marketing advice or hiring decisions. That is how they become bigger and better. Now, would you want to grow your assets too? Or being unsure where you want to put your money in to?
Myth 5: Insurance is expensive.
(Just like how a LV bag is expensive but people still buys it) Most people are grossly under insured, across all income groups. The average consumer thinks life insurance costs more than it actually does and that it is a needless expense, especially if they are young. The insurance cost depends on life expectancy – and life expectancy is constantly increasing – so, the younger you are, the cheaper it will be.
There you have it. 5 myths about financial planning that most people have. Invest wisely in your Journey With Money. We hope that everyone can retire early and prepare for the next stock market crash. Do also focus on financial planning (singapore) to avoid financial pitfalls along the way.
Feel free to like, comment or share the post or contact me at firstname.lastname@example.org. You can read more information about me at The Financial Planner (Singapore).
Myth 6: Employer-provided life insurance is all you need
Group insurance has great benefits but it may not be enough.
Normally, your employer may provide you with life insurance equal to one or two times your salary (around $50,000 in Singapore). This may be sufficient if you’re single and it’s enough to cover personal debts. However, it might not be enough if you have a family.
Even if you are able to purchase an additional amount from the company, you may lose it when you leave your job. Food for thought. Will you start at your company forever?