There are many good money advice out there for you. But, is it actually relevant for you?
I would like to share this after I saw the wokesalarymanâs post recently here as it resonates with me a lot.
When I curated this financial blog, the sole purpose was to share whatever financial advice I found useful. Similar to many other financial bloggers, we often share general guidelines on what to do for our finances.
Although, a lot of this money advice is good and reasonable.
One should definitely filter these general guidelines and understand whether it actually fits your life.
I can’t emphasize this enough. Personal Finance is indeed PERSONAL.
Some of the many good advice that are out in the market right now, that I am guilty of, I preached.
1. The 50/30/20 Rule
What does it mean: Spend 50% of income on needs, 30% on wants and save 20%
This generally should be used as a general guideline and may not be suitable for everyone:
- People who earn a lot, or very little
- People who have very ambitious goals, or less conventional
Why?
If you are single, compared to you having a family, there will be a drastic change in expenses and you definitely canât be expecting to spend as little as when you are single. Hence, people’s circumstances change, and do take some of the rules with a pinch of salt.
2. How much emergency savings do one need?
As a rule of thumb, I feel that 6 months of emergency savings is more than enough as I am still a student right now.
For most of us, we do not have any dependents that rely on us. Hence, 6 months of savings should suffice.
As people’s circumstances are different, when you are freelancing, or you have dependents who rely on your income. Perhaps, having more emergency savings would make more sense.
3. What type of life insurance should you get?
Life Insurance is often deemed as one of the important insurance one should get.
A very common advice among financial bloggers are: âBuy Term, Invest the Restâ
What does it mean?
It essentially means buy term insurance and invest the rest.
On the other hand, some financial advisors may preach you to purchase whole life insurance. More often than not, these policies tend to be pricier.
Why âBuy Term, Invest the Restâ?
If you were to invest consistently and prudently, you would definitely make much more than the cash value portion in the whole life policy. While if you donât, a whole life insurance policy might be a better option.
4. Buy the S&P 500 Index Fund
Whenever anyone asks me, what should I buy or invest in?
I will often preach S&P 500 Index Fund – VOO.
The S&P500 is an index that tracks the largest 500 companies listed on the US Stock Exchange, which gives you instant diversification.
There are many researches that have shown investing in S&P 500 consistently is probably the best investment out there for anyone wanting to invest.
However, your investment horizon and risk appetite will alter what investment is best for you. If you want something more short-term and have lower risk, perhaps something along the lines of Treasury Bills and Singapore Savings Bonds may suit you better.
What can you do?
1. Learn and understand your options
2. Consider what advice is relevant to YOU
Our Stand
Undoubtedly, adulting is tough. There are many things which we donât know. Moreover, we donât know what we donât know. Hence, the one best thing one can do is to learn good money advice. Ultimately, it is YOUR finances. Hence, you should be more concerned about it more than anyone else.
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If you are keen, check out our articles on other analysis: Trust Bank Referral, Term vs Whole Life insurance and US Debt Crisis Explained.
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Disclaimer: The information provided by LearnToInvest serves as an educational piece and is not intended to be personalised investment advice. âReaders should always do their own due diligence and consider their financial goals before investing in any stock.