Wednesday, 15 July 2015

Not Knowing Personal Finance Is A Blessing?

Recently, I chatted with one of my colleagues, who is in her 50s. She and her husband are still working and they have 2 children.

She was sharing that she has no saving. Retirement has never come across their minds. She recently upgraded from a fully paid 5 room HDB flat to an Executive Condominium (EC) that costs them close to a million dollar.



Here are what amazed me:

Me: How long is your mortgage period for the EC?

Her: As long as I am alive (I thought it was a joke)

Me: Cannot be beyond 65 years old, since bank will not loan above retirement age?

Her: Why think so much, I have no idea how long my mortgage is. I only know I can't stop working. Life is too short to think of money matters

It comes to my mind that many people in older generations don't have personal finance knowledge and they don't plan. However, they worked till dropped and they lived well. They can drive a car, a condominium, branded goods, and spend every single cent each month.

Life is good isn't it? So, not knowing personal finance is a blessing?

There is no such thing as knowing too much, unless it :

1) involved secrets that will threaten your life; or
2) is not your priority

I doubt most of us in Singapore have such threats that deter us to know too much. We are encouraging life-time learning.

I will replay the conversation in a different setting:

Me: How long is your mortgage period for the EC?

Her: Up to 65 years old

period.

Her benefits of knowing personal finance:

1) Know her options during unforeseen circumstances
2) Self sufficient (Regardless of family background)
3) Overcome her fear of never be able to retire
4) Financial knowledge to educate her children
5) Less financial stress; More sense of security
6) Less debt; More financial freedom
7) Possibility of financial independence for better priorities in life

Her benefits of not knowing personal finance:

1) Advocate of "You Only Live Once" YOLO mentality
Live in present, not past or future (Spend all your money and spare no effort for future)
2) Keep you going in your job because you need a job
3) Life will settle itself when time comes, don't stress about it

So, is a blessing or not?



20 comments:

  1. Hi Frugal daddy,

    I think it's a matter of how you handle the information. For some, not knowing is better than knowing, because they don't think they can change anything. Since they can't change anything, might as well not know! It's like knowing there's something wrong with your body, but refused to check up in case it turns out to be a health risk.

    For me, I always prefer the hard truth. It prepares me for the future and I would rather know than not know. If I know more, I'll be determined to do something about it.

    The ostrich lifestyle is not for me!

    ReplyDelete
    Replies
    1. Hi LP

      So you are in the camp of ignorant-is-not-a-blessing. Fortunately or unfortunately, we belong to the same camp. I prefer to know and be contented. Yet, do something to make it better but avoid feeling lousy, disappointed or over-concerned. It was quite challenging at start to feel good yet knowing so much hard truth. It takes time and self-awareness to practice. Life is too short and we should feel good about the moment and the future.

      Talking about health check up, I always quite sceptical (I still do check-up every year). I got to know many unconfirmed medical cases were either undetectable or exaggerated. It is only when your medical conditions are obvious and confirmed, then the treatments would be handy. *Pray that there is a good doctor when we need him/her.

      Delete
  2. Hi Frugal Daddy

    I concur with LP.

    I would have prefer the hard truth. Not knowing personal finance can relieve all the stress about money management but it doesn't change the fact that one may be disadvantaged not knowing at least the basic money management skills.

    ReplyDelete
    Replies
    1. Hi B

      For many, they are like horses. You take away all the distractions and they just dashed forward, forever. This is what keeps them going knowing they have debts and financial obligations. They will work and work forever.

      It could be a good thing for them because once they stopped working, they suddenly lose focus and nothing to think of in life. They will then start developing dementia and other medical problems. They have zero interest in money management. For some of the older generation, they felt talking about money is so lifeless.

      I would chose to know, be contended and do something about it to reach my goals. :)

      Delete
  3. Frugal Daddy,

    "they worked till dropped and they lived well."

    Isn't this bliss?

    1) Found something we like to do forever and ever!

    2) Live well, isn't this good enough?



    ReplyDelete
    Replies
    1. Hi SMOL

      I enjoy you asking from reverse perspectives, which is unique and thought-provoking, haha.

      1) It is good to like to work forever. The problem here are this group of people, do they like it or they are forced to? Could they have indirectly forced themselves to have debt and other financial obligation, so that they have no choice but to keep working? It is self-deceiving, isn't it?

      2) Live well is good. However, if anything happen mid-way, they best have insurance else they will be bankrupt immediately and their children will suffer. My happiness don't derive purely from luxury enjoyment, though it is good to have it if I have extra money. So you will ask, what is extra money. haha...

      Delete
  4. Frugal Daddy,

    Fear manifested mostly because of unknown factor, so, the more we know, the more we can counter the fear factor... ;-)

    ReplyDelete
    Replies
    1. Hi Richard

      This is a new perspective. Indeed. However, it takes self awareness, practice and positiveness to overcome fear. :)

      Delete

  5. Few of my colleagues now in their late 50s and 60 are worrying over their re-employment as they still have a few more years of mortgage payments. Cool when they are in their 40s in upgrading.

    ReplyDelete
    Replies
    1. Hi CW

      Which is better? :

      1) No upgrading, fully paid mortgage of say, 5 room flat

      2) Upgraded to EC, mortgage remaining of $300,000 till 65 years old. However, sell off the EC whenever they stopped working and cash out by downgrading back to 5 room flat.

      Both end up with 5 room flat, with the option 2 enjoyed EC facilities with a few years. Who will have the final laugh in their bank account? Subjective to property sentiment at the time of buying and selling?

      Delete
  6. "It comes to my mind that many people in older generations don't have personal finance knowledge and they don't plan. However, they worked till dropped and they lived well. They can drive a car, a condominium, branded goods, and spend every single cent each month."

    Hi FD, guess your above statement is pretty single opinionated and over generalized from one example of your colleague stated above. maybe not in general old people LAR...

    Maybe they have a rich children u does not know who can support them if anything happen.

    ReplyDelete
    Replies
    1. Hi Rolf

      Thanks for moderating my example. It is good for readers to have a balanced perspective.

      My colleague that I mentioned have 2 children at secondary school and JC/Poly level. I doubt the children can be rich. Maybe in future the children can be rich, but whether they are filial is another factor. Do we want to consider our children allowance for us as part of financial planning? I didn't include that for myself. :)

      My colleague is also a junior staff but I suspect the husband should be high income earner. Maybe they have rich relatives or parents? Who knows.

      I used older generation because they have been there and proven. If I used younger generations, I can't have much opinions because they still have a long way to go. You replace the word "older" by "younger" and read again, make sense? :)

      I love your opinion, as it reminds me that different readers have different ways of interpreting messages.

      Delete
    2. Hi FD,

      Perhaps in my opinion, I will prefer a more balance and fairer para as follows. This is because frankly not many old people spend till they dropped. In fact on the contrary they save a lot...

      So it probably reads ...

      "It comes to my mind that most non-educated and junior employees in older generations don't have personal finance knowledge.

      They have little knowledge about plans as they live each day as it comes. However, they worked hard and in fact many do lived pretty well here in Singapore.

      Some like my colleague mentioned can even drive a car, owns a condominium, buy branded goods, and spend every single cent each month."

      :-) Just a fun exercise!

      Delete
  7. Hi Rolf

    1 of the reasons I blogged is to improve my writing skill. I am glad you give your input.

    In my real world, many older generations really worked till dropped. Few of my extended relatives have saving. However, I do observed my peers have much richer parents. Maybe I am living in a well. Lol.

    I like the way you write. Thanks

    ReplyDelete
  8. Hi Readers

    Update: Because of the wonderful comments by everyone here covering different perspectives, there is no need to introduce a part 2 on the same topic.

    Thanks everyone for the comments and keeping the topic lively!

    Cheers
    Frugal Daddy

    ReplyDelete
  9. Hi Daddy,
    Your friend is courageous. There is nothing wrong in working for life. The question is the reasons to make us keep working. If I am working in Old age, I would like it to be something which I love & not just because i cannot afford to stop working.
    Ignorance can be a bliss ... may be for a few years.

    I have a few friends in there 30's & 40's who have a similar philosophy as your friend in the 50's. So i do not think that our generation is going to do better.
    Evolution has ensured the survival of the fittest & only time will tell who of the 2 will do better in the long term

    ReplyDelete
  10. Hi Daddy,
    Your friend is courageous. There is nothing wrong in working for life. The question is the reasons to make us keep working. If I am working in Old age, I would like it to be something which I love & not just because i cannot afford to stop working.
    Ignorance can be a bliss ... may be for a few years.

    I have a few friends in there 30's & 40's who have a similar philosophy as your friend in the 50's. So i do not think that our generation is going to do better.
    Evolution has ensured the survival of the fittest & only time will tell who of the 2 will do better in the long term

    ReplyDelete
    Replies
    1. Hi GP Blogger

      Thanks for sharing people in the 30s and 40s have similar situations. Personal finance evolved along generations. This issue can be disguised in many forms.

      As long as we don't look back with regrets, I think it is not far off from a meaningful life.

      :)

      Delete
  11. Thank you for sharing; your conversation with the older lady made me smile. You said that you have found that people in the older generation don't know finance, but how many in our generation took their future finances into consideration when we were younger? I, for one, did not, and now I am left in a world where it is nearly impossible to make ends meet. My lack of thought about my financial future in early adulthood resulted in the taking out of a multitude of student loans and acceptance of way too many student credit cards. Now that I am older and have more of an idea about life and the importance of my financial decisions I surrounded by debt and seeking lenders who provide bad credit loans.Finance is certainly much more important than most people realize.

    ReplyDelete
    Replies
    1. Hi Amber

      I hope you can clear your debt as early as possible. I hate debts.

      I googled some suggestions on how to clear debts quickly:

      1. http://www.moneysense.gov.sg/Understanding-Financial-Products/Credit-and-Loans/Getting-Out-of-Debt.aspx

      2. http://www.fool.com/personal-finance/credit/9-ways-to-pay-off-debt.aspx

      Good luck.

      Delete