If money jargon or budgeting scares you, you’re not alone. Experts tell Cheryl Leong how to tackle your fears and start growing your savings.
1. I DON’T WANT TO SET MYSELF A BUDGET
Budgeting is scary because it impacts on your lifestyle and takes away your freedom to spend on whatever you want. So, Constance Lim, independent financial adviser and volunteer financial education trainer with the Association of Women for Action and Research, suggests calling it something else. “Call it ‘strategic planning’ to increase your ‘raw materials’ (your savings) instead.”
Some people think budgeting is something you do only when you’re broke – which isn’t the case.
Constance cites an example: “I read about a man who earns $30,000 a month but ended up owing $600,000 worth of credit card debts. It’s not about how much money you have – budgets are essential to help you manage your cash flow so that you won’t sabotage your financial future.”
Constance suggests setting aside 10 to 20 per cent of your pay into your savings first. “So even if you spend the rest, your savings are secure,” she says.
Ask yourself what your objectives are. Being able to afford a home in five years? Saving for your kids’ education? Growing your nest egg for retirement? “With a goal in mind, it’s easier to give up buying one less pair of shoes and having two fewer expensive dinners out a week,” adds Rebecca Regan, senior financial planner from AAM Advisory.
2. I DON’T WANT TO KNOW MY REAL FINANCIAL STATUS
Most of us have a general inkling but often neglect to examine our financial statements and check on loans, savings and debts, because it’s a confrontational process, says Constance.
“In doing so, you’re admitting that you may have overspent for a long time and now have little to no savings. Or that you still have a long way to go before you can pay off your house or car. But being financially healthy means acknowledging that you may have a problem before you start looking for solutions.”
Rebecca agrees, adding that if it scares you that much, do it with your husband, friend or financial adviser – someone you can trust.
3. I DON’T UNDERSTAND THE FINANCIAL JARGON
Numbers, financial jargon and the sheer amount of information available can be overwhelming. But that’s no excuse to shy away, says Constance.
“Get acquainted with financial concepts through books like the Dummies Guide series, Rich Dad Poor Dad by Robert Kiyosaki or The Richest Man in Babylon by George Samuel Clason. These are written simply and aim to help people with no financial background to understand money matters easily,” she says.
And if you already have a financial adviser or have friends in the financial industry, don’t be embarrassed to reach out for help if you don’t understand something, says Tanya Maher, senior financial planner from AAM Advisory.
4. I DON’T KNOW HOW TO FIND THE RIGHT FINANCIAL ADVISER
“Financial advisers sometimes have an unfortunate reputation as ‘salesmen’ who stop contacting their clients once you’ve signed with them. But like any relationship, it takes two – you can take the initiative to engage with your financial adviser too,” says Constance. This will help them to understand your needs better and motivate them to keep in touch.
Finances are deeply personal. So before you take a leap of faith, ask your prospective financial adviser for references or client testimonials, suggests Tanya.
“It’s perfectly all right to speak to three or four financial advisers to see whom you feel most comfortable talking about your money with. If they fail your ‘interview’, then they’re not suitable for your needs.”
5. I DON’T THINK I HAVE ENOUGH TO INVEST
6. I DON’T LIKE TO TAKE RISKS
7. I DON’T HAVE TIME TO WATCH OVER MY INVESTMENTS
8. I DON’T WANT TO LOSE MONEY DUE TO FINANCIAL MISTAKES
9. I MAY NOT HAVE ENOUGH FUNDS WHEN I RETIRE
10. I DON’T WANT TO ARGUE WITH HUBBY
Lee el artículo completo en AsiaOne Business News.