So you’ve finally bade your twenties a tearful farewell. What’s the first thing you must do? If you said start using anti-ageing facial products, we can guarantee that you’ll age a lot faster if you don’t make the following three money moves.
Get out of credit card debt
Singaporeans have a love-hate relationship with credit cards. We love them for their perks (and, for some people, the bragging rights), but some clearly have a big problem when it comes to paying those bills.
Credit card debt is something that more and more Singaporeans are falling prey to, despite the news reports that incomes are rising. Many of these people in debt are actually decently paid. Of the people in my personal network who’ve found themselves steeped in thousands of dollars’ worth of credit card debt at some point or other, there were bank executives, civil servants and young families.
The problem with credit card debt is that once you fail to pay off that first bill, it gets harder and harder each month. The money you owe grows exponentially thanks to the power of compounding interest—that means that $5000 you took out to buy that designer handbag balloons to much more than $5000 in a few short months.
If you’re still carrying credit card debt in your thirties, it’s time to commit to paying it off in full once and for all. Aggressively scale back on your expenses so you can get rid of all that debt in as short a space of time as possible. No matter how many poor money decisions you made in your twenties, you’re still young enough to bounce back, so give it your best shot—grass doesn’t taste so bad once you get used to it.
Do some sound financial planning before committing to weddings, children and property purchases
If you’ve already ticked off the milestones of marriage, children and a property purchase in your twenties, this doesn’t apply to you. Same goes for those who are resolutely single or have made the decision to be child-free.
But for the average Singaporean, whose first marriage comes at the age of 29, that big wedding, raising a kid who hopefully won’t fail the PSLE and coughing up enough for your first home are a triple whammy.
Those who still have the chance to plan financially for these three expenses should take the opportunity to do so carefully.
There are many Singaporeans who spend the average of $30,000 to $50,000 on a wedding and then struggle to pay off debt, commit to buying the most expensive property they can afford and then find they’re working themselves to death to pay for it, and splurge on their kids like there’s no tomorrow because Junior deserves the best in fencing lessons, baby gym classes and the latest gadgets. It’s easy to spend on these things when you haven’t done proper planning and aren’t aware of the long-term financial implications.
That could be one reason why retirement looks set to become a huge burden as our society ages.
If planning ahead means you realise you want a cheapo wedding at a small restaurant rather than that wedding banquet, opt for a 3-room flat instead of the five-room flat and get Junior to join the school’s soccer club instead of signing him up for golf lessons, you might actually be better off in the long run. Plus, we’re sure Junior will grow up to be a more charming young man if he spends his kindergarten years playing rather than attending those expensive enrichment classes.
Not making sure you and your family are properly insured
When you were in your twenties, you might have gotten away without experiencing any accidents or serious medical issues. You were young and strong, and even if you fell into a monsoon drain on your way back from clubbing, you still managed to drag yourself home with nary a scratch.
Hate to break it to you, but you’re not immortal, and the older you get, the more susceptible you are to ill health. If a punishing work schedule has led to your neglecting your health for the past decade, or you’ve simply been knocking back one too many beers after work, your first health issues might start surfacing in your thirties.
That’s why it’s so important that you ensure that you and your family are adequately insured. Don’t assume you’ll be able to, or want to, rely entirely on MediShield Life—if that’s all you’ve got, your treatment options are significantly limited.
As a 30-something, you should not be as clueless as your 20-something counterparts. It’s also less likely you can use a low salary as an excuse for not being able to pay for a basic medical insurance plan. If you still don’t have one, compare plans on MoneySmart’s health insurance wizard.
This story first appeared on Moneysmart, 20th December 2016.