Let’s face it.
Adulting is difficult. From being given extensions at school because you had a breakup, to being sacked because you haven’t performed well at work, the change can be enormous, and difficult to endure.
That’s why we hope to add some contrarian advice to making it as an adult, especially in finance.
Many of us weren’t taught good, working principles to approach money. We would hear advice like:
- Get a good job!
- Don’t quit your job!
- Be safe
- Buy a house
But does this advice actually work? Does it make you happy? Because we can earn lots of money, but lose our health and happiness in exchange. The happiest people I’ve seen don’t earn much money, whilst the wealthiest people I’ve seen don’t seem very happy.
Don’t get me wrong. I’m not saying that money is evil. Having lots of money can certainly make the world a better place for you. But that needs to be balanced alongside the need to be happy.
There can be a balance.
But before that, let’s look at the common myths to adulting. As a former social worker who worked with many clients who had been bullied at work, or who had experienced mental distress due to work, I’ve seen many common ‘truths’ we hold dear that often result in poor outcomes.
You should stay in a job for the income stability
In October 2021, I was given the option to extend my contract at my previous company. I refused. I didn’t have a job lined up, and I had failed multiple interviews.
But I wasn’t happy at my previous company. For 5 months, I faced difficulties sleeping after the traumatic experience of working with difficult colleagues, combined with the stressful work of resolving difficult client problems.
The income stability disappeared. But in exchange, I got more emotional stability.
Income stability, whilst working for an employer, is a myth. Having seen both my parents retrenched multiple times, I’ve seen how their sense of security disappeared upon losing their jobs.
Your income stability is actually more unstable, because getting sacked means that you’ve no more means to survive.
Running my own business now, and seeing income from multiple different clients means that even if one client disappears, I can still earn money. That’s really important.
More money doesn’t hurt
It hurts. Very badly. I used to earn a healthy SG$3690 as a social worker. But it brought about a great deal of unhappiness. I found myself I didn’t want, to placate the sense of unease I felt within me.
More money can hurt. Especially when you don’t have the time to spend it.
There is a place for a healthier way to live, when not every waking moment is spent tied to your employer. As I’ve looked at my peers spending time in the office from 8am to 8pm as lawyers or bankers, I’ve seen how unhappy they’ve become. Sure, their purse strings may be looser, as they can afford to spend more money. But they are working on things that they don’t believe in, and enriching clients who might not really need the help.
That’s why we see lawyers or corporate bankers making the switch, after deciding that they’ve had enough of the money.
Money only goes so far.
And it can hurt to have too much of it, because you find yourself buying things you don’t want. You find yourself trading time for more money.
I remember meeting an acquaintance recently at a dinner. He shared (rather proudly, straightening out his chest as he said it) about how he was flying to New York for a conference.
I wondered if he truly felt happy. Because airport lounges can be the loneliest places in the world. And however nice your flight may be, it’s still a small seat on a cramped plane.
The way I saw it, he didn’t have the freedom to choose where he wanted to be, how he wanted to spend his time, who he wanted to be with.
Sure, he could earn lots of money, but I doubted that he was truly happy.
What do you do?
Financial fitness starts with frugality
I’ve friends who earn $2000 a month. But they spend as if they were taking in $5000 a month.
They would take taxis around. They would eat out at restaurants once or twice a week. They would buy $5 lattes, everyday.
There is no shame in being frugal. One friend I admire, despite having been in the limelight a lot, lives very frugally. She rarely eats out. She would eat at cheaper food courts, rather than restaurants. She would carry bags that were well-used, even when she could afford nicer handbags. She would rarely buy anything without a proper reason.
Her example can inspire us. Often we buy things to impress others, or we feel that we need something. But do you really need a new phone, when the old one works fine?
Something that you can do is to try putting off any purchase above $50 for a week. Anytime you want to buy something, put it off for a week and continue using what you already have. You will find that the need gradually diminishes.
Another way is to cook your own food. Over the past two months, I have started cooking my own food. You can see from the two sheets below on my expenses.
This is below the average $300 to $400 a month spent by others.
When you cook your own food, you also become healthier, as you begin to observe the things that you put inside your food.
Frugality follows every penny
Make it a point to track every penny and dollar you spend. You will be surprised at what it reveals about your spending habits. You may discover a takeout habit that you never realised cost you so much.
Following every penny is easy. Just use an Excel sheet, and write down everything you spend on.
Make eating out a default no
Over the past few months running my own business, I’ve needed the liquidity to ensure that I can meet business expenses. This has resulted in me bringing out my own food.
Eating out is today, a default no for me. Even when people ask me out, I would often tell them that I would bring my own food, so that I can save money.
Eating out can be one of the most expensive things in your budget. Add up the $12 you spend on a restaurant meal 2 times a week, and that would be almost $100.
It could go a long way towards.
Stop caring so much about retirement
Here in Singapore, we have a great retirement system that automatically channels 20% of your income into a savings account.
Many Singaporeans end up CPF-rich, but not cash-rich. There’s a big difference. CPF is money you can’t touch. Whilst it’s wise to save up for your retirement, there’s a delicate balance that needs to be drawn.
What’s the point of saving so much money, only for you to spend your last 30 years, when you’re 60, not really able to have the adventures you want?
You might as well have those adventures now.
This is not about being reckless and stupid. But it’s acknowledging that whilst some degree of planning is important, some degree of flexibility too is vital.
There’s a cost to stability. The cost is called freedom. The freedom to move as and when you like, to other work you want to do, is rather important. Why would you want to stay stuck in a job that you don’t want?
Don’t make a house your first investment
They say that a house is an asset.
Not really. If you’re staying in it, and paying a mortgage on it, and not getting any income from it, it’s not an asset. It’s not producing any income for you.
As angel investor Naval Ravikant defines assets,
Assets earn as you sleep.
Shackling yourself with a 30-year mortgage when you’re 30, doesn’t seem very wise. Especially when all you’re paying for is a roof over your head.
There’s a much sustainable way to get that through renting.
Build assets, not liabilities
Assets earn as you sleep. Liabilities take as you sleep.
In the earliest phase of your life, it’s vital that you build as many income producing assets as possible, whether it be through:
Build alternate streams of income
Tying your income solely to one employer is not going to be sustainable in the longer run.
Building skills that can earn money outside of your job can be a way to grow your income in the longer run. When I quitted my job, I never expected that the side-hustle of writing and training would eventually be adequate to meet my needs.
But it did.
Doing that required more than 3 years of constant work, pitching and growing a client base to make it financially sustainable.
If you want to start, start now.
Invert the 50-30-20 rule
They say a good rule of thumb is to spend:
- 50% on daily necessities
- 30% on miscellaneous items
- 20% on savings
I would invert that.
Always target to save more each month, more than you ever need. When you do that, you give yourself options. You can quit a job if you don’t like it. You can wait for a better job to come by, rather than taking the first one that comes because you need the money.
The ability to have options is priceless. And you give yourself options by giving yourself a savings headroom whereby you can negotiate.
Think of it as a lifebuoy for the times when you could potentially drown.
Saving 50% each month is really possible. It forces you to spend on the things you really need, rather than things that you don’t want, but only spend because you want to look ‘good’ in front of someone else.
I remember the time when I bought a $1.60 tea, desperate to show someone I was networking with that I had money to spend. But the truth is that I didn’t.
I only did that to impress her. That’s not the best way to spend your money.
Saving more than you ever need, is the way to go.
Automate your savings and investments
There can be lots of friction in investing. You have to transfer your cash, pick the investment, and then find the right time to buy.
There’s an easier way. Just automate it with a monthly savings plan.
This reduces the friction involved, and makes it akin to the sit on your ass investing that Charlie Munger, the vice-chairman of Berkshire Hathaway, suggests.
Few people want to spend time studying stock charts, and wondering when the best time to buy something is. They would rather be doing life.
Make it easier for yourself.
Ever had those days when you’re just too exhausted to work more? You’re knackered, tired, and your brain feels fried.
On those days, it really helps if you take time to treat yourself to something nice.
Make these treats regular, so that you have something to look forward to every weekend. Don’t wait for a friend to ask you out, or to invite you to something nice.
You can do that for yourself.
When you do this, you allow yourself to enjoy the joy of your hard-earned money. As much as it’s important to save, it’s also important to spend on yourself.
Treat someone else to a meal
I don’t earn a great deal of money. But I’ve found that making it a point to treat someone to something nice, like a meal, or a cake, or even a coffee, has been really helpful in teaching me that money is not just meant to enrich my life.
It can also enrich the lives of others.
Doing this can make earning money more meaningful than just about yourself. If you see the joy your treat can bring someone, you will probably be more tempted to earn more.
I don’t often treat others. But recently, when I paid for a friend’s meal, and saw the joy on her face at having some nice food to eat, it made the hard work of earning money worth it.
Seeing her enjoy the ambience of the restaurant, the drink, reminded me that earning money wasn’t just a selfish endeavour. It could also be a noble one.
Adulting starts from action
I’ve heard many people tell me about their business ideas. But having seen many other businessmen, I’ve come to see that those who really succeed don’t talk too much.
These tips provide a series of small actions that you can start right here, right now.
What are you waiting for?