Saturday, August 11, 2018

Working MaMa's Financial Logic

I have borrow some financial related books other than parenting related books from the library recently (mainly due to running out of interesting books to read). Some of the books (Taiwanese/Chinese author) I borrowed has their storyline focus on financial planning for ladies. I'm quite curious as the books somehow imply women tends to be either more conservatives or they don't plan well for their own retirement.

As a mother of two and especially having a daughter, it makes me think about what knowledge I want to pass down to my children. I wouldn't want myself or my children to spend way more than we can afford and paying minimum sum on that credit card bill (which I am surprised that seems like a lot of people is doing that despite the high interest rate credit card company have).

One thing about early financial planning is about compounding interest. However, I think mostly the context of the books are too optimistic on yield of returns at about 10%. In Singapore, if you can find a saving accounts with 1% without any tie down (I mean savings account which you can withdraw immediately without impacting the interest rate. Fixed deposit have a higher interest rate only when you don't do any withdrawal until mature which is similar to endowment) you can count yourself extremely lucky (as at 2018. I used to be able to get Monthly Savings Account at 1.68% for two years during 2007 but well~ good deal doesn't last~). Even the money market fund only provide around 0.8% to 1% returns (in Singapore).

Yield from shares varies but there will be fluctuation on the stock prices so choose wisely by looking at the business model and the financial reports. I'm thankful for my previous employment working on corporate financing, during that period I learnt how to read the financial reports from credit analyst. It really helps me when I am doing my own investment.

Saving a portion of your salary immediately after you receive your salary and then spend the remaining are more easier than trying to save after spending. No matter how less we earn, we should instil the habit of savings and only spend within our means (we do not have any other loans except for mortgage).

While managing extra expenses on children, we should also plan for our own retirement. So~ I am still working towards it. This is the wisdom and knowledge I would like to pass down to my kids. Maybe next time I can write more about how working mother can save on income tax and save on kids related cost.

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