5 Common Misconceptions Dispelled!
By Mabel Tan, founder of Bliss Concepts
Are you and your sweetheart embarking on your wedding planning? Besides planning for the wedding day itself, have you thought about how things are going to be in your married life together? Mortgage loans? Utility bills? Parents/ In-laws? Children? Entertainment?
The best way to start is to educate yourself and get rid of any hear-say misconceptions that you have come across. Much as money is not the end-all and be-all, the fact is that finances will form a very crucial part of your married life. You may not have married your spouse because of money, but bills will still have to be paid, mortgage to be settled and kids (if you’re planning any) still has school fees to account for.
Thus, here’s a brief guide on 5 common misconceptions that can be dispelled through financial education. If you didn’t think about this before reading, now is a good time to plan for your financial future as you start your married life together.
Check the list below — are you making any of these mistakes?
1. I don’t need to pay attention to my mortgage as my CPF will handle everything since we’ve both been contributing to CPF since we started work.
As a general rule of thumb, your total monthly debt payments (including your home loan) should not be more than 35% of gross monthly income.
Also, CPF monthly repayments will only be possible with your monthly contributions to CPF. What happens if you are retrenched? Or unable to work? It is best for you to seek professional financial advice and make arrangements for these to ensure that your property is not at stake when mishaps happen.
2. I can’t afford to save money now. I have so many bills to pay for and loans to settle.
Can I say the same that since you have bills to pay for and loans to settle you will not go for movies/ entertainment with your friends and will not go for meals at restaurants? Saving your money should be part & parcel of your daily habit – like brushing your teeth!
By not eating well, your physical health is affected; by not sleeping well, your mental health is affected. Similarly, by not cultivating the habit of saving, your financial health is affected!
3. I can carry debt as long as I make the minimum payment each month.
While this may be unknown to you, most credit-card companies charge 2% monthly interest rollover balance on a daily basis, if card holders do not pay the full amount on due date. This means that when you only clear the minimum payment for the first month, the balance amount gets rolled over and the next month’s amount gets bigger and bigger.
2% per month compounded can mean that with an average $500 monthly outstanding bill would have compounded into $6,706 by the time your 12th bill comes! As you ponder over how to repay the full amount, by the 2nd year, that outstanding amount would have ballooned to $8,504. What more, once you have an outstanding balance, your future charges will not be interest-free! The high interests are really equivalent of legal loan sharking!
If the interest on your accounts is accruing at a pace that simply won’t allow you to realistically pay off your accounts in a reasonable amount of time, it’s a good idea to start seeking professional help on managing your debt.
4. I don’t have to start saving for retirement until I’m at least 40.
By the time you’re 40, you will be making the same excuses as when you’re younger: bills still have to be paid and groceries still will cost you your money! BUT the disadvantage is that you have much less time to accumulate for the amount you would need for your retirement.
Time is your benefit! While you two are just embarking on your married life, set aside some money for your retirement together. Seek financial advice on how much you would need and how to best handle the money to meet your retirement goals. If you save diligently from age 25 to 40, you may be able to retire earlier than your peers and enjoy!
5. My partner is financially savvy and so I don’t need to bother about knowing anything.
Your partner may seem to be financially savvy, but it doesn’t hurt to know more! The more you know, the better you’ll be able to take care of yourself and your family. Also, while some things may seem straight-forward on the surface, it is always beneficial to seek a second opinion with Financial Professionals before making your final decision. Ultimately the one to benefit is you and your family!
Make a point to begin educating yourself about good financial habits — it’s never too early or too late to let go of the wrong habits and get started on the road to financial fitness!
Copyright © 2009 Bliss Concepts. All rights reserved.
nice post.thank you for nice information
thanks Jack!
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Thanks!