In your journey with money, you probably would have seen articles after articles of how young people are retiring at a young age. Then you look at yourself and think maybe you can do that too. Wow. I want to be like them too.
5 minutes after the inspirational moment, you probably would have some thoughts like these running through your mind.
“They must have come from a well to do family”
“They must have got lots of connections”
“They must have…..”
Indeed, some of them might have a wealthy family. Indeed, some of them might have lots of connections. However, not everyone is like that. Some of them are ordinary people such as yourself. I have spent several years of my life talking to successful people. Many of them are in our midst. I know of a friend who is doing administrative work in Singapore and he is already financially free. Yes. Someone doing an admin job in Singapore can be financially free. Did I mention he also have a family of 4 to feed? I also know of students who are already financially free before they graduate. Now, how can they do it?
I have nailed down three key factors why they are so successful in their financial planning. In their journey with money, they quickly realized that just working isn’t going to help them retire at a young age. What they needed is a combination of skills, knowledge and practice. Plus, they need to accelerate the process so that they can retire at a younger age. This requires a strong and resilient mindset of course. As you are reading this, you probably are ahead of 70% of the people in Singapore in terms of having a resilient mindset. Well here it goes.
#1 – Earn as much as possible
If you have noticed those who are retired very young, most of them are earning at least $100,000 per year. (source) That makes up around $8,000/month. In Singapore, the medium income per household is $8,666 in 2015. (source) Looks like we are on the right track here. Now hold on, in that case, won’t 50% of Singaporean have a shot at financial freedom? Let me just breakdown what’s happening here. In the Straits times report, it is reported that median monthly income per household is around $8,666. In Singapore, it is very common to have both the husband and the wife contributing to the household. If we divided $8,666 by 2, the figure will be $4,333. Would that be a better representation of your income? Now, in those articles, those people are individuals earning $100,000 a year by themselves. Wow. Noticed the difference now?
That being said. They probably work their ass off in their work to achieve those kind of results. While we can admire or can grumble about them having such nice opportunities, why not try to achieve those kind of results too? Here are some ways to do it (not limited to these)
- Work overtime
- Do a part time job
- Give tuition to students (oh gosh, this earns well in Singapore)
- Study for your Masters (you might be in short term debt for this)
- Ask if you can take your neighbor’s dog for a walk for a fee
The whole idea is to get creative in your journey with money.
#2 – Save as much as possible
Our first job gives us the excitement of seeing our bank account jump for the first time. Have you noticed yourself buying more things at the start of the month than at the end of the month? Being a financial planner, I noticed this trend in many young graduates. As I journey with them, they tell me their regrets of spending too much in their initial years. As one of my clients aptly puts it in Singlish, “You can never buy finish everything one”. For those who come from another country, it means that there will never be an end for material possession.
Very interestingly, many of them never know where their money goes to. They have no idea what their money is used for or what it is spent on. On the other hand, those who are successful usually save around 50% to 70% of their pay and they keep track of what they are spending on. They also find ways to save money so that they can invest their money for the future. If you have no idea where to start, this financial excel cheat sheet might be a great way to help you. Another practical step on how save money is by reading How to save up to 50% when dining with eatigo and AIA Vitality.
#3 – Invest
Unless you are living in the stone age, you probably would have heard of investing. We have 24 hours a day and there is a limit on how much we can earn. We might even get sick because we overwork and that is trouble. Click here to find out how not to lose money. That’s unfortunate and of course we won’t want that to happen.
You probably also have participated or listened to conversations such as these.
“Eh. Have you heard of xxx stock? Recently, my friend invested in it and earn $10,000. Mai tu liao (don’t wait and buy now)”
“My friend say this stock very good. My friend very zai (good). I should follow him”
That might sound like investing. Unfortunately, it is more like gambling. There are many courses out there that teach people how to invest. Some of them are free. That is a good place to start. We have also free resources that you can find over here. I find that the most useful ones are those paid courses because they are more willing to share what they know and guide you throughout your journey with money. Investing is the next key as it will accelerate your cashflow. Can you imagine if your return is 20% a year, it will take you 3.8 years to double your money. I hope your bank can keep up with this. Imagine your portfolio doubling until a point where it can replace your income. At least that’s how some 28 year old or 31 year old are doing it.
There is really no secret to retiring. It just takes a certain decision and a right mindset. We do work together with selected individuals to help them achieve their own success. Unfortunately, we can’t help everyone too as we have our own families to return to as well. If you would like to speak to us, do leave a note and we will get back to you as soon as we can.
Learn more about the financial planner here.