Are you living from one paycheck to another? If you are, it means that you are financially poor. I’m not talking about low-income “poor”, even high-income earners can be financially poor too.

According to the Singapore Business Review, 73% of low-income households are saving less than 10% of their monthly income. Unexpectedly, 37% of the top income earners are spending everything they earn.

Before you close this article thinking that it is a savings plan advertisement, it is not. This article is written to help you understand the 5 reasons why you may be financially poor, and how you can get out of it.

If you are having money issues, it is simply because you have issues with money. Here are a few of them:

1. Living with your parents

Most Asians live with their parents until they are married. Before that season, they are dependent on their parents’ income. They receive allowance whilst in school and they don’t pay for the monthly mortgage instalments even when they are earning their own income.

That is the culture in most Asian families; we live with our parents for the first quarter of our lives. And in this quarter, we learn and pick up habits the quickest. So, if you want to make real money and learn the importance of it, it is time to move out from your parents’ place.

Learn the value of money and money will value you. Move away from the mentality that even if your money has depleted, you have your parents’ money as a back-up. Such a mindset doesn’t mean that you value money, it means valuing your wants and needs above money.

Second, opportunities. Are you taking opportunities from your parents or creating your own? Are you pursuing your income from your passion or from a career that is set by your parents?

Earning an income from passion will be valued differently from income that is earned from a career that is pre-set for you. The former drives you to excel in your field, respecting every dollar you earn. The latter places you in a position where you live to get by because that is not your field of interest.

If you are currently in a professional career where a certain qualification is needed that was set by your parents, don’t waste it. Instead, find your passion within the field you are in and start seeing yourself valuing the money you earn.

If you are in a position to change your career, it is time to move and find a career where your interest is.

2. Money illiteracy

Most people do not know how to save, this implies to both the high and low-income groups. As mentioned by Singapore Business Review, 73% of low-income group save less than 10%, while 37% of the high-income group spends all of their earnings.

The digital age allows information to flow freely and I am sure you can find articles on savings everywhere. If you have a financial planner, utilise them for savings advice. They would be in a position to advice you on what you need professionally. A quick tip: Always save 10% of your monthly salary into a separate bank account. If you earn $2500 monthly, you should save $250 every month. In a year, you would have saved $3000. The higher percentage you save, the higher savings you have.

The knowledge of money will help you save and plan for wet weather situations!

3. A “budget” mentality

The budget I am referring to is not the amount you set aside to spend for your wedding, to buy electronic gadgets, or household items and furniture. What I am referring to is the “go for the cheaper option to save a few dollars” budget mentality.

There’s an old saying that goes, “Every penny saved is a penny earned”. No. Every penny saved, is a penny not spent. Likewise, if a product costs $250 and you bought it for a 50% discount at $125. You did not save $125, you spent $125.

If you live your life on a budget mentality, chances are you will be spending more to replace a quick-to-wear-out product. You need to understand the quality of the product that you are purchasing and look to purchase for long term usage. If you buy a $500 refrigerator that can last you for 10 years compared to a $150 refrigerator that can last you for 2 years, you would have spent $300 in 4 years.

4. Comparing financial status

Have you ever compared your financial status to someone in a worse situation? Comparison is never a good thing, but believing that your situation is better through this comparison is worse. Your financial situation is still not any better.

Justifying your situation with someone that is worse off is a financial suicide. It creates a bubble of belief that you are financially stable. When you find yourself in a wet weather situation, your bubble is burst.

How about measuring your financial status to someone who is financially stable? If you want to measure, measure your situation to something greater. Motivate yourself to reach the stability you want.

5. Negativity and Denial

Monday blues and TGIFs, the two most hated and celebrated day of the week. Not surprisingly, the people who hate and celebrate them are those that works nine-to-six schedules. Time is money and if you are not working and thinking on getting ahead of your tasks at work, you are wasting time. Instead of complaining, start working!

On the same token, if you are having a bad financial situation, admit it. The first step towards improving is to admit your mistakes or situation. The second step is to stop blaming others; the product on sales and cost of living. Confront your problem with finances, put your attention on income apart from savings.

If you are still struggling with finances despite saving 10% monthly, try utilising your skills to create extra income. With free and easy digital platforms available, you can create passive income without any capital. For example, if you are good at video-editing, find opportunities for freelance work. Be willing to do whatever job for however long to fix your situation and make it your duty, obligation and responsibility to get your financial life in order.

How important is money?

Money is not the most important thing. Money brings happiness, but it will not fulfil you. Money brings sadness, but it won’t stay for long because money can be earned.

The more you value money, the more it values you. Go live the life of your dreams and create your own path by understanding that at the end of the day, money only reflects your beliefs.

Sincerely,
Mario Singh