If you are a gainfully employed woman in your 20s or 30s, you’re at a pivotal time in your life. You likely have greater earning power, career prospects and family-centred workplace privileges now than ever in the history of ladies your age to plan the life you truly want. Do you aspire to be a high-flyer in a corporate role that is delightfully balanced with joyful family life at home? Or maybe you want to stay single and travel the world like a modern-day Bedouin, reinventing your living as you go? Do you have plans to start your own business one day and be so successful you only work two days a week and spend the rest doing good in your community? Perhaps it is more in your cards to build a life off the grid, traversing the globe with your homeschooled children in tow? You might also be one to enjoy working for someone but with the choice to take a few years off your professional life, only to return with renewed force when you are ready.
The possibilities of your paths ahead are limitless and they are all within your limits. The only catch is that you need to start planning early. And by early, I really mean NOW.
“The only catch is that you need to start planning early. And by early, I really mean NOW.”
Life Stage: Young Working Adult
If you are a gainfully employed woman in your 20s or 30s, you’re at a pivotal time in your life. You likely have greater earning power, career prospects and family-centred workplace privileges now than ever in the history of ladies your age to plan the life you truly want. Do you aspire to be a high-flyer in a corporate role that is delightfully balanced with a joyful family life at home? Or maybe you want to stay single and travel the world like a modern-day Bedouin, reinventing your living as you go? Do you have plans to start your own business one day and be so successful you only work two days a week and spend the rest doing good in your community? Perhaps it is more in your cards to build a life off the grid, traversing the globe with your home-schooled children in tow? You might also be one to enjoy working for someone but with the choice to take a few years off your professional life, only to return with renewed force when you are ready.
The possibilities of your paths ahead are limitless and they are all within your limits. The only catch is that you need to start planning early. And by early, I really mean NOW.
Why is financial planning important for me?
Many people often don’t have a clear direction until much later in life. Hence, they don’t start planning for the future early enough. Young women are not spared. You may know very well about giving in to temptations to pamper yourself a little too excessively. Without striking a good balance between savings and indulgences, your urge for instant gratification may be detrimental to your finances. And by the time you realise it, salvaging the situation will likely have become extremely challenging.
A professional financial consultant can help you see the gaps in your plans to your life’s milestones – both conventional and non-conventional ones – in life. For example, you may have evergreen goals, such as saving up to build a family, buying a home, or travelling the world. You may also decide to take the path less taken, for example to take a few years off for a vacation, go on a sabbatical, or even start your own business. With a robust financial plan, you have to roadmap to your dreams that helps you allocate your savings smartly towards your goals, and spur you on even through the tough days.
I too, believe in the importance of rewarding oneself with some guilt-free funding (AKA “fun money”) to keep ourselves motivated along the way, as we work hard in life. As an adviser, I give my clients a bird’s eye view of their current financial picture, to ensure that they do not miss any blind spots. I work alongside them in personalising and customising solutions that fit into their goals and dreams, while ensuring consistency and steady guidance throughout their time with me.
Life Stage: Marriage
Getting hitched may not be in everyone’s life plans. But if you decide that married life is for you at some point, you may be thinking down the path of buying your together home and perhaps even starting a family. Having a good financial plan even before the pitter-patter of little feet come along will ensure you can be the best for yourself and your better half.
What are some financial steps to consider or map out before I tie the knot?
If you don’t have plans for a family any time soon, you might want to focus more on building financial security and independence, as well as multiple streams of income. This will enable you to achieve financial independence, have more choices and options without constraints – for example, to consider early retirement, or to be able to provide for your elderly parents.
If starting a family is in your future, consider your insurance protection needs. Consider your income sources should you want to take a break from your career to start a family. Recognise the need to boost your rainy day funding, that is, a good amount of cash reserves to serve as a safety net to tide you and your family through unforeseen events. You will also need to segregate your finances properly into multiple pots with consistency. For example, you would want to consider saving a portion some of your funds in cash reserves, another for accumulation instruments with a good balance of capital preservation and capital growth that will help concurrently take baby steps for short, mid and long term goals. Ladies should not only focus all their current resources on short term goals (3 to 5 years) but rather they should look on how they can concurrent plan with however much resources they have, for their mid-term goals. This is typically for events within the next 5 to 10 years. Goals like buying your first property and longer-term goals (10 to 20 years) like getting their dream home or early retirement ultimately. At the same time, try not to let your emotions get in the way. Impulsive shopping and retail therapy can provide some level of emotional relief and can be fulfilling. However, if some measures of trouble are because of financial stress, there is a possibility you may end up in a vicious cycle whereby your retail therapy will eventually lead to more binge shopping. Like most other aspects of life, acting on impulses or desire for instant gratification rarely have long-term benefits to your finances.
Life Stage: Motherhood and Beyond
Being a parent is a blessing that comes with many responsibilities. As you build the family you want, there will be much on your mind. An adviser can help you plan your finances so that you can still enjoy financial security, especially if you choose to take a step back from work to focus on being your best for your family.
What are some strategies I can take to generate income for my family, if I eventually want to transition into life as a full-time homemaker?
A good strategy is to build up your portfolios before you move on into your new role. For example, dividend-paying portfolios and annuity can provide payouts for a lifetime, which can enable you to continue receiving streams of income via different sources. With more financial freedom made possible by an adviser, you will be better able to skip the dilemma of choosing between work and children.
If I am not generating income, will I still need a financial consultant?
Yes! It is still important to have an adviser by your side. Planning doesn’t stop when you stop working or take a break from your career for the kids; it’s essential to also continue keeping up with your personal goals as well.
What should I do with my finances before I take a break from the workforce?
First, you will need to have a safety net in place. I would generally recommend ensuring that at least a substantial amount of emergency funding is in order and rely on no more than 50% of your passive income monthly to sustain your basic expenses during prolonged absence from the workforce. You can take some of the following actions:
- Consider the upkeeping of the subsequent premiums existing policies, be it insurance or savings
- Be realistic about your needs and wants – that is, to set, and work within a budget
- Track your expenses prior to transition, and minimise expenses
- Draft an action plan with a timeline
- Plan with a worst-case scenario in mind
- Pay off most of your debts first, such as credit card loans, instalments or loans
- Have a backup plan, such as contract or freelance work, or a home-based business
Life Stage: Retirement
How can I ensure I have a comfortable retirement?
If you plan early, your retirement will not necessarily be affected, even if you stop generating income for a while. For example, some of my clients worry about their quality of retirement if they take a break from the workforce, as they will be losing opportunity cost from not working. It is recommended to set a clear goal on why and how long the pause in income generation is going to take, then thereafter advise them on how they can close up the gap going forward. Some clients take a break to further their studies, either a masters or degree which in most cases will in turn give them opportunities to gain increments of at least 20-30% thereafter to close up the gap. A handful of clients do take a break of 3 to 6 months just to clear their mind off and thereafter have a clearer direction which generally leads to better career path and income. So sometimes with certain pause, it may not be so bad after all.
A pause in income generation may also take a toll your ability to invest. You may then see your investment profits slow down due to the effects of compounding – that is, the accumulation of interest or profits to generate larger returns progressively. As a financial consultant, my role is to personalize a portfolio for each individual. I generally encourage a balance of good asset classes along with fluidity so that in the event of a pause in income generation, client will still be able to continue accumulating without deviating too far off their plans.
Additionally, your earning power will typically decrease once you retire, and investing in higher-risk financial products may not be as feasible as it once was. An adviser can safeguard the wealth you have worked so hard to amass over the decades. For example, as your adviser, we will discuss various financial products protect your wealth from market volatility by recommending financial products that may be more to your lifestage goals. In this way, you can rest easy knowing that your money is still working at top gear for you. With your family wellness consideration all factored, you’ll be all set to really enjoy your golden years.
Team Vytro Advisory Group
Adeline Liow
When it comes to advisory, Adeline sees herself as a “lifestyle planner”, where she is a firm advocate of striking a balance between work and life through savvy financing planning. To meet her vision, she works with a passionate team of like-minded individuals who enable their clients to accelerate their wealth to fulfil their lifestyle goals and dreams. A firm advocate of securing financial freedom as early as possible, Adeline hopes to help her clients “buy more time to spend with their loved ones”. Almost five years into the industry today, Adeline supports over numerous clients, many of whom are young working adults in achieving financial security, so that they can live their lives to the fullest together with the ones they love most.
IPP Financial Advisers Pte Ltd
78 Shenton Way #30-01 Singapore 079120 | Tel: +65 6511 8888 | enquiry@ippfa.com |
IPP Financial Advisers Pte Ltd
78 Shenton Way #30-01 Singapore 079120
Tel: +65 6511 8888 | enquiry@ippfa.com