April Fool’s Day is a European invention that has gained traction in Asia in recent years with big brands getting in on the act. In 2019 Grab touted a GrabFoodCopter service in Malaysia, which promised to deliver Singaporean food to Malaysia by helicopter! A brilliant marketing ploy that gently poked fun at the food rivalry between the two countries.
Fooling about is fun, but not where your finances are concerned. Being a fool with money can have serious consequences, causing stress and leading to a life of precarity.
Here are our five golden rules to avoid being a financial fool:
1. Live within your means
If you can’t afford it, whether it is a gym membership, the latest phone, or a new pair of designer shoes, don’t buy it. Some expenditure is indispensable – food, accommodation, utility bills, and insurance, for example – but much is not. Above all, avoid putting non-essential expenditure on credit cards as it’s too easy to enter into a spiral of debt that is hard to get out of and will cost you dearly in terms of interest repayments.
2. Don’t spend everything you earn
You may be earning a good salary but if you blow it all every month you’ll never reach a position of financial security. By all means, celebrate your hard work with treats and luxuries but ensure that you also set aside a reasonable amount of your earnings to save each and every month.
3. Keep bank deposits to a minimum
It is, of course, essential to keep a certain amount of money easily accessible and that does mean saving it in the bank. But this should be limited to enough to cover your day-to-day expenses and an emergency fund of six months’ worth of essential expenditure. Anything above that should be invested elsewhere to generate a higher return than measly bank rates and avoid inflationary erosion. If you’re not sure where to invest, get some advice from a qualified financial adviser as part of a holistic financial plan.
4. Protect your wealth
Health and life insurance are an absolute must to protect your wealth. If you or a family member become ill or, god forbid, you die, it’s essential that funds are available to cover the cost of medical care, in the case of health insurance, or to maintain a standard of living if your family are left without a major breadwinner in the case of life insurance. You may also want to consider critical illness cover and income protection which will also protect your savings in the event of unforeseen life events. Read more about why you can’t afford to be without wealth protection here.
5. Have a financial plan
A financial plan which looks at your long-term requirements, including retirement and education fees for your children, is a surefire way to avoid financial foolishness. This involves setting concrete financial goals and consistently working towards them by saving and investing over the long term. It is a life-enhancing and liberating process that helps achieve peace of mind. We know because we’ve seen the magic happen time and again for our clients.
If you’d like to join the ranks of the financially secure and leave foolish habits behind, we can help. Our advisers have a wealth of experience in turning financial fools into wise investors. Find out more by contacting us and setting up an appointment with one of our consultants across Asia.