Wednesday, 17 September 2014

The First Step is Always The Hardest

Today, I received an email from a reader of my blog. His questions were very good, and so I'd thought I share it, but however keeping his identity secret of course!

Let's refer to him as Reader A. Now, he shared with me that his monthly allowance was $400 which I believe is the average allowance of most Singaporean teens (correct me if I'm wrong)

He is also clear on his needs/wants/savings and allocates $200 for his needs, $120 for his wants and $80 for his emergency fund.

However, he had a question on emergency funds. Therefore, to clarify, emergency funds should never be used for investing. However, there are a few extreme cases that you can do so. Maybe the share price fell, or you see a good stock but do not yet have enough cash. Therefore you use your emergency fund with the mindset that you'll pay it back. (This scenario has happened before to a fellow blogger)

I'm quite happy that Reader A has taken the first step on his journey. The information I provided him however, is strictly personal and therefore I will not share it on the blog!

However, I realized that there were several things that he can tweak in his allocations to increase his savings. For example $120/month for wants might be too much. 

Here, I'm assuming that the average needs already includes lunch/dinner/transportation. Therefore wants could include movies, clothes, bags etc etc. My advice would be to spend less on wants, and save it instead! Maybe $120 on savings and $80 for wants. But that's just me :)

The first step is always the hardest. But it's the only way to reach the second. I'm glad that my blog has managed to help at least one person. And I wish him all the best in his journey.

Signing off,
Teenage Investor


  1. The first step is not the hardest, the last step is. For first step you always have a goal/vision, its hard but at least you know where to aim. If you come to the last step (like terminal illness, end of project, want to resign/got fired etc), you always don't know what to do ahead of you since you have no aim at all, so its the hardest.

    1. Hi Anon!
      Interesting perspective! However it works both ways! Having a vision/goal doesn't necessarily ensure the courage to take the first step. Same goes for the last step. Hope that scenario never happens!

  2. Hi Teenage Investor!

    Interesting article here! I myself will be surpassing the 'teen' age in another two months so I warrant I am still eligible to leave a comment on this perspective! :)

    Firstly, I take my hats off Reader A for his courage and dedication in taking his first step in financial independence journey too! Please keep it up!

    Secondly, being a teen (still), I have tried almost all the recommended ways to save and spend efficiently and I have found out that there is one way that seems most feasible to me(and working)- being to Plan to Save, and Save to Spend.

    Since the allowance is already 'shortchanged' in a sense, the most important thing to do first is to plan your expenses (needs) to save the rest. This will include transport, meals in school and outside, school textbooks/stationery, class funding, etc.
    The good thing here is getting allowances from parents means the absence of CPF contributions, income tax, and of course, there is no need to give your parents your allowance (back?) haha! This is already a big amount of cutback in your cash outflow!
    Once you have these planned out and saved the rest, please go ahead and spend as you like.

    Yes. What is in your mind right now must be: the rest should always be saved. HOWEVER, if I want to buy something else out of my needs, I can only take out a cap of 20-40% of all the savings for it.
    This percentage should be the average of 'wants' expenses you spent in the recent months. If you would like to trim your spendings from today onwards, you can reduce the threshold, etc. However, stick to that percentage once you set it. Did I mention that discipline is the key here, in fact it is required in the whole of your financial journey. ;)
    Going back, this will also mean the 20-40% should be set into a separate account if possible and accumulate monthly until Reader A wants to use it.
    And he, can spend anything in the world with that 20-40%. No strings attached.
    I called it savings instead of emergency fund as it is a subset of savings, which means saving comes first.

    After reading this and implementing, I hope Reader A will see and be marvelled at how his net worth and savings wealth accumulates over time while he continues to study more about investing topics to learn to compound this warchest in near future!

    The Independent Abecedarian

    1. Hi, TIA!
      Thanks for your valuable input! Similarly, I too hope that he will persevere in his journey!

    2. Hi Teenage Investor,

      No problem. Keep up your resourceful site! Will be bookmarking your site :)

      The Independent Abecedarian

  3. Start by saving even a small amount is good. I used to save only $80 per month too but with a much lower allowance. It becomes a habit which will be good for his future.

    1. Hi SGYI! Thanks for passing by!
      Your blog is really good, would you like to link up?
      Linked you already :)

    2. Thanks for your kind words. Have linked you up too :)