When you start a new family, you are excited to plan everything you want to do together. You must already be occupied with thinking about places you’re going to live, or where your kids will go to school, or the family activities you can enjoy and so much more. But according to experts, it is also a time to focus on your financial goals.
According to the AXA Better Life Index 2021, financial well-being is increasingly being valued among Singaporeans. It is even found to be the most important aspect of well-being among millennials.
But while seven in 10 Singaporeans claim they already know how to stay financially healthy, there is still one in two that reportedly suffer from a lack of financial well-being.
To further understand the purpose of financial management for young families, theAsianparent spoke with Agnes Lim, a Senior Financial Services Manager with Momentous Hallmark Group, an agency unit representing AXA Insurance (Singapore), and — most important of all — a proud mother of four children.
On the importance of having financial well-being when starting a family, Ms Lim says, “Being financially ready is important but I believe that the love and desire to have kids must take precedence.”
“Looking back at my own experience, I don’t think there is any financial amount that is ‘enough’ nor is there a best time to have kids,” she shares. Adding, “That being said, it certainly helps to be financially healthy as it can prevent or ease any financial burdens that come with increasing expenses when starting a family.”
The mum of four also stresses that it is crucial to remember that having or maintaining financial health “requires constant work on our part no matter how advanced we are in the journey.”
At this important milestone, Ms Lim explains that having financial well-being can then let families avoid being excessively stressed out over finances.
“To achieve this, we should know what our priorities are and choose a lifestyle that allows us to build financial resilience,” says Agnes. “For example, if saving for our child’s education is a priority, we can start by making lifestyle adjustments such as sacrificing some indulgences so that we can save more towards it,” she adds.
Back to the AXA Better Life Index 2021, it was also found how one in five of the Singaporeans surveyed feel they have inadequate financial knowledge to pursue their long-term goals.
Being a financial practitioner, Agnes has had the benefit of speaking to and hearing from people of “all walks of life and different age groups.” With this, she has generally found many to have bold savings and retirement goals.
Although, most of them admit that they have “inadequate knowledge to kickstart their journey.” They are unsure what works best for them and their family.
On top of that, Ms Lim shares that many young families could be making ends meet especially if they have just had their marriage ceremony, bought their matrimonial home, a family car, and had a new born.
“Many will be sceptical of how it’s still possible to have savings when expenditure is high. This is a common struggle and highlights the importance of having the discipline to save a portion of your income every month unfailingly, so that you save before you spend,” she says.
She adds, “This may be a simple concept but it’s not always easy to do as we can get carried away with wanting to have what others have and striving to keep up with the Joneses.”
Ms Lim continues to tell theAsianparent that a lack of financial knowledge could also limit one’s dreams and desires. For instance, in Singapore some parents dream of helping their children buy their first home, however, many do not think this can be possible if they are just an average earner.
“With financial planning, they may be able to do that or at least help their children out with a significant financial contribution,” she advises.
When asked how young families in Singapore can start maintaining their financial well-being, Agnes gave theAsianparent the following money tips:
1. Start by taking immediate and committed action towards regularly saving a portion of your income.
2. Adjust your lifestyle, such as by assessing what you need and what you can do without, so you can save more and reap the rewards in your later years.
3. Define your goals for each milestone or life stage for your family, especially for your children, and work out a plan to help you achieve them.
4. Speak to your financial adviser on how to kick start your protection and/or savings plans for your family. He or she will help you to better understand your current financial position, your future financial needs, and how you can meet them.
5. Always have a family support fund that you can tap into in case of an emergency.
Ms Lim also shared simple ways we can change the way we live in order to maintain financial management for our family’s future.
1. Cut back or limit dining out at expensive restaurants. It’s good to reward yourself occasionally, but not all the time.
2. Don’t overspend on anniversary celebrations. Set a realistic budget in advance or keep them simple.
3. Save money on gifts by making them instead of buying expensive gifts. Where possible, involve your children and make it a fun family activity.
4. Consider if your family has any large expenses you can cut back on, such as expensive overseas trips. Travel to a nearer and more affordable destination or explore new places in Singapore as a family at close to no cost.
5. Stay healthy as a family by exercising together. Good health is essential to help you achieve your goals and prevent illnesses and the associated medical expenses.
“For example, if a family member needs to be hospitalised, do you have savings set aside or insurance to cover such expenses? If the answer is a ‘no’ for both questions, then it’s a red flag,” explains Ms Lim.
She adds, “Many will choose to transfer these risks by having insurance coverage, in order to prevent massive bills that can derail a family’s financial future.”
Agnes advises having savings goals for different life stages. She says, “It pays off to start saving early because you get even more time for compound interest to work for you as you work towards your saving goals.”
“I also see real value in instilling this discipline in children from a young age, and personally I encourage my children to save money regularly by putting aside some pocket money in their piggy bank,” she shares. “Children feel a great sense of achievement when the money is saved for a goal and they are able to reach it.”
Trying it out herself at home, Ms Lim shares how her children have learnt to sell duplicates of LEGO figurines that they have.
She says, “While they may not always earn a profit, it’s fun and educational for them and sometimes they get to use the money they make to buy more mystery Lego bags.”
“Something else I teach my children at home is to delay gratification and save money,” she also shares. “Take for example if your child has enough savings to buy just one mini Lego figurine, should he/she go ahead to make the purchase or save more for a longer period of time in order to have enough money to purchase more mini Lego figurines at one shot.”
“It’s not so much about what they are purchasing but getting them to contemplate if they really want something and if they can wait to get something even better,” she makes sure to add.
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This article was first published in theAsianparent.
