Being Frugal or Being Cheapskate?

Everyone is born with a different spoon in their mouth. Some entered the world with a golden spoon right up while some are out with a plastic one. Nonetheless, I believe that majority of us today should be contented that regardless of spoon they're having, they actually have one.

Comparing to the slightly unfortunate ones in some other neighboring countries who probably not have any spoon to go with, we should be glad and count ourselves lucky.




Personally, I do not have the privilege when I enter the world 20 years ago to be fed with what we see in the image up there. Or rather, I should be. But the spoon happens to fell to another wing of the tree and I've come to earth with a disposable spoon in my mouth.

In fact, I believe that this is the best gift I'd ever receive from God. Who would ever know what these rich families could be engaged in just like the dramas we see out there?

 

I'm honored and blessed to come to this world and definitely more than happy to have my family with me. The experience of my childhood might not be perfect but I certainly know and am aware that I have a loving family to begin with till some time later. 

Soon later, my family enrolled themselves in a dangerous and sticky financial situation.

Having to live through such a childhood had brought awareness to me about perspectives and making financial decisions prudently while I'm growing up.




As a result, I became more conscious when it comes to taking monies out of my pocket and more commonly I'm perceived as a cheapskate to my friends.

Probably due to differences in each eye for how money is perceived, I'm a cheapskate for most of the time.

Having that said, I'm still a human and I do have my soft spots as well. I certainly believe that as a human we should not thrift ourselves too much to the point we are living just to build our bank account balances. 

We should also have a fair share of entertainment and enjoyment to keep our lives occupied. 

Shortly after, I got a taste of what my family went through myself in a miniature way as I got over-whelmed and complacent by what we can do with money.

So am I fortunate? I guess I certainly am.




This bad event had turned out to be another lesson that constantly reminds me to not ever fall into such a situation ever again and had educated me on the word - DISCIPLINE. 

Read: A letter to my 30-Year-Old Self - 10 Years Ago



We can be prudent but it's also essential for us to have discipline.

As a human, we are all brought up differently. We have different speed of learning and different perspective towards the issue. But however, I do believe that we are the only person that should be responsible for our well-being and wealth. 




It is never good to not take responsibility for your own positions when it comes to the financial aspect.

Before we even jump into any topic of investment, I strongly believe that managing your own finances is the most important lesson one could pick up.

When we earn, it's important for us to know about saving too. 

If we don't learn how to save up, we will not be having a choice or say when an unfortunate event arises.




Yes, you will then be in the mercy of your situation. 

So am I a cheapskate?

Part 2 coming soon.

You will also be able to look for me on some other platforms:
1. FB Page - The sleepydevil
2. InvestingNote - sleepydevil
3. SGX Cafe - sleepydevil
4. You may also subscribe to receive my latest email updates here. 

Planning Ourselves And Our Finances

With a clear objective in mind, we will be able to work towards planning.
With sufficient planning, we will be able to know which steps to take accordingly.

It's important to factor in contingencies into our planning as well to be prepared for such events.

If you plan to have no plan, you will have to first start with a plan.
If you have no plan from the start, you will end up having trouble planning.

"I shall not offer or say I’ll give anything unless I’ve 100% confidence to deliver it"
This action will only deviate you further from achieving what you are originally supposed to. Especially with our mental biases, we will tend to lack in the motivation to put effort into it since we are not obliged to.

Definitely, everyone is constructed differently.
And as much as I've highlighted it, the most important thing is to know ourselves.


Everyone has a different profile and there is no method that works best for anyone. Each individual will have a separate set of techniques to apply in different situations.

Bringing them into the topic of finances.

So long we have an objective in our mind, we will need to plan for our finances. Such as towards big ticket items, our lives and certainly towards retirement.



Understanding our current profile will allows us to move into the planning with our given situation. It's never good to be planning for yourself in another's shadow.

Having that said, we should also prepare for contingencies, such as preparing an emergency funds to weather us through stormy days. This contingencies also include events when your investments turn sour and jump into the sea of red.

If our situation today does not provide us with a good cashflow, we should identify the cause of it and work towards improving it. Only with a positive cash flow, we will be able to achieve our targets with a lesser effort.

Having that said, the next important thing is line is our motivation and mentality. 
If we tend to think that, just because I am not able to fulfill it, I shall not do it. It's time we reflect a little more on ourselves. 

When reflecting, apart from identifying the issue. The most important area will be the solution towards it. 

Read: Controllable VS Uncontrollable Factors

On a side note,
After sometime of contemplating, thesleepydevil has now joined Facebook!

Hopefully with that, there will be more interactions created between readers and bloggers! :)

Do drop by my new Facebook page/profile to say Hi!
Link to: thesleepydevil Facebook Page


You will also be able to look for me on some other platforms:
1. FB Page - The sleepydevil
2. InvestingNote - sleepydevil
3. SGX Cafe - sleepydevil
4. You may also subscribe to receive my latest email updates here.  

Peace Of Mind and Emergency Funds

I've come across this question several times as the amount of cash I've indicated seems relatively low in comparison with my invested capital. 

'Do I have an Emergency Funds available?'
The answer is, Yes. I do. 

I've also indicated this at the bottom of my page on 'Portfolio':

Portfolio you see here does not include emergency funds, CPF funds or any other form of money required for daily expenses. Funds/equities here are purely my investment portfolio which I've established when I'm 19 years old back in 2017. Also, should the market evaporate completely, I will not starve because of what that is here. 


The keyword is 'starve because of what that is here'

It's definitely not pleasant to go through this sticky situation twice after 2016.

Read: Polytechnic Student with $3.63 as Net Worth - 1 Year Later

If you are going to starve because of your investment in big financial events such as GFC or losing sleep because the counter you've bought is going south, it's very likely that you are overly-invested in the market. 

While I will not talk about how good/bad having an investment is. Neither will I talk about the need to have one. The most important thing is to have a peace of mind, regardless of what you do. 

Personally, I feel that the emergency funds provides me with a safe level of comfort, which gives me a peace of mind when being invested. This has allowed me to sleep easier at night too. 


One can definitely argue about the need to have an emergency fund available to you when credit cards and several options are readily available. Or even certain that you have no kids, no liability, still studying.. Why do you need it?

Remember the word there? Emergency Funds.
This means that this sum here is supposed to help you when there is an emergency. This emergency could be a sudden loss of income, illness or anything that demands an unexpected amount of expenses from you. 

As a student, having emergency funds suggests to me that even if I do not work and my invested capital fully evaporates, I will not need to ask for dollars from my family even when my expenses account depletes totally. 

I don't enjoy asking for dollars from my family and it had been a really long time since I last done so. 

At least for 6 years, if I did not remember wrongly. 

Yes, it applies to even when I have $3.63 as my net worth. 
Fortunately enough, I had been working a little and my pay came in the very next day. 

This taught me a very serious lesson. 

Having this emergency funds available, it prevents me from starving and offers me a peace of mind.  

At least for the duration that my emergency funds are able to sustain me and that I do not have income due to any reasons, I'm not having a big headache as someone who doesn't have one!




So, instead, ask yourself:
1. How much is your overall monthly expenses? (This includes mortgage, food, bills etc.)
2. What is your age and how 'long' of emergency funds will you need?
3. Most importantly, with that amount, will you be able to sleep in peace when you loses your income and investment evaporates completely? 
4. No? Increase the amount by a fold.
5. Still no? Increase it by another fold. Repeat until you can sleep peacefully. 
6. If you still couldn't sleep peacefully, it's time for you to reduce on your un-neccessary commitments. 

Remember.. peace of mind is priceless.

It's important to be able to sleep in peace. 

You may also subscribe to receive my latest email updates here. 

Read: Peace of Mind and Emergency Funds. Really?

Singapore Savings Bond (SSB) - 1.65% (May 2018)

This time round. It's more attractive!

The SSB issue for May 2018 offers a 1.65% interest for the first year! Stretching up to 3.00% for the 10th year. Aside this, the SSB monthly issurance size has also increased from the usual 150 million to 200 million due to increasing demand for SSB!

Image taken from SSB's site - www.sgs.gov.sg

Seems like SSB is getting some popularity in recent days!



As usual, I've been looking around for a good place to park some funds for a short term. Today's release of SSB for May 2018 has come to me as a surprise.

The rates we see here today is even better than rates offered by fixed deposits from banks that I know off (in SGD for 12 months)!

I've mentioned earlier in a post back in January about the shiny part I like for the SSB issued in Feb 2018:

1. The flexibility in your funds
2. A risk-free place for you to park your money with no capital loss
3. A relatively lower amount required compared to FDs.  

If the rates offered by SSB is lower than what we can get from fixed deposits, why SSB then? 
As a consumer, I must find product that caters well to my needs/wants.
 
I do not want my funds to be rotting and the interest here from fixed deposit or SSB today will save me a little on the opportunity cost.

I want the funds here to be easily liquidated. SSB can be liquidated at any given month before the bond matures with no penalty. Interest is pro-rated too (more information here). On a side note, the only charges will be $2 for redemption and $2 for application.

I want some assurance on these funds too so I can sleep in peace knowing that my opportunity funds will not lose its value or evaporate. This will allow me to better make use of bargains in the future.



Too good to be true? But never buy blindly!

One must bear in mind that it may seem really attractive for a risk-free bond to generate 1.65% on a short term of 1 year, only proceed on when this fund here is a spare fund to you and that you can last for at least a month while waiting for proceeds from redemption.

Do note that for redemption of SSB, it will require a little bit of time as well.
Redemption of SSB will be closed on the last 4th business day of the month and proceeds will only be paid on the 2nd business day of the following month.

For more information on redemption, please check on from SSB's official website here.

Interest Rates for May 2018's SSB (for GX18050E):

Source: SSB

Here are some important dates for this bond for anyone who's interested to consider:
Issue Date: 1 May 2018
Maturity Date: 1 May 2028
Interest Payment: 1st interest payment date on 1 Nov 2018 and subsequently every 6 months on 1 May and 1 Nov every year.

Application Period: 
Opens: 6:00 pm, 2 Apr 2018
Closes: 9:00pm, 25 Apr 2018
Results: After 3:00pm, 26 Apr 2018


For more information, please visit SSB's website on the latest bonds here.

I will be applying for some SSB in May 2018's edition to park my funds.

You may also subscribe to receive my latest email updates here.

Read: 
Singapore Saving Bonds (SSB) - 1.55% (Feb 2018) 

How many account does this 19-year-old student has?

The answer is 4. Different accounts are meant for different purposes.

1. Expenses Account
2. War-chest
3. Emergency Funds
4. The Dream Account

Let me break them into different parts now. Whenever, I receive a sum of money, be it my salary I’ve received from my part time job, some extra cash from occasions like Chinese New Year, I’ll allocate them into portions whereby it will go into my various different accounts.

Expenses Account

This account is used for general expenses like food & beverages, clothing, transportation etc. Expenses should only be spent from this account. As such, if this account is running low, I will have to ensure that my spending is lesser until my “next paycheck” comes in. However, I do realize that even in this account, I manage to accumulate a little savings here as I do not empty my expenses account totally every month. For this account, I’m using my POSB Savings Account I had since I’m a kid. This is because POSB/DBS offers great convenience in locating their ATM for easier withdrawal.

War-chest

Funds that are allocated into this account will be used for investment purposes. No withdrawal will be made by this account. Dividends received from shares I own will be credited into this account as well as payments for shares transaction. I make it a point that I’ll transfer a certain percentage of any “cash inputs” I’ve received to this account. I’ll maintain a certain balance for reserves to be deployed in a depressed market.

Emergency Funds

The emergency fund is an account used to set aside funds needed in an event of any personal financial dilemma. It will be dependent on the average living expenses over a period of time (3-6 months).  The account will be reviewed accordingly when I progress with age, as I would have larger expenses. This will also mean that I’ll need a more funds in that account to be able to sustain myself for 3-6 months. At the present moment, the emergency funding account has sufficient amount of money that will be able to sustain myself for at least 3 months. I do plan to slightly increase the funds in the account so that it will allow me to sustain myself for 6 months. This is not a lot of money, as my expenses are pretty low currently. The funds in this account must be a liquid asset.

The Dream Account

This is an account whereby the funds that are inside will be used to buy the “want” things or for expenses such as a vacation. The percentage of allocation to this account is lesser as compared to the other account. The day this account hits a certain amount which Is sufficient for me to get what I “want”, that will be my reward day.

It’s a pretty simple system. I personally feel that with this system, I’m able to do things I want without having to worry if I have sufficient for the latter. Why do I need to complicate myself and create so many different accounts for myself? 

Well, because it provides me with the comfort to shit in peace, knowing that:

-      If I’m in a deep-shit, I’ve my emergency funds to back me up.

-      If my investment turns sour, it will not cause me to jump down from a building

-      When I’m getting my “wants” or going for a vacation, it does not break my bank

Peace of mind is indeed priceless.