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Speaker 1: money talks is brought to you by OCBc Bank. Just

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Speaker 1: in a few words, could you give us your thoughts

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Speaker 1: on the following pen and paper or budgeting app.

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Speaker 2: Budgeting apps

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Speaker 1: counting every dollar?

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Speaker 2: Not necessary. Just focus on the big things.

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Speaker 1: Budgeting as a couple.

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Speaker 2: Communication is key

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Speaker 1: setting financial goals

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Speaker 2: important and should be done as early on as possible.

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Speaker 2: Thank

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Speaker 1: you so much.

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Speaker 1: Thanks for joining us. I'm Sarah like Aldi. Let's be honest.

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Speaker 1: Keeping a diligent budget is hard work that most of

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Speaker 1: us probably choose not to do. Just like counting calories.

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Speaker 1: It's too much of a chore to keep track of

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Speaker 1: every dollar spent.

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Speaker 1: But with inflation taking a real bite out of household

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Speaker 1: budgets everywhere. Financial advisers say it's never a better time

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Speaker 1: to start making and keeping a budget simply put budgeting

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Speaker 1: is making a plan based on your income and expenses

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Speaker 1: more than just helping you track your finances a budget

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Speaker 1: also helps you understand your spending habits and your relationship

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Speaker 1: with money. Are you subscribing to

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Speaker 1: more streaming services then you have time to watch. Are

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Speaker 1: you shopping online and buying more things than you need.

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Speaker 1: If you have no idea where all the money you've

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Speaker 1: been earning has been going to or need some tips

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Speaker 1: on cutting down spending this episode is for you to

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Speaker 1: help us with. This is genius. You Jonas hosts a

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Speaker 1: financial podcast called the building financial fitness podcast. She's also

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Speaker 1: a finance blogger over at misfit fi dot com,

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Speaker 1: Jonah, thanks so much for joining us today. Yes,

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Speaker 2: it's my pleasure. Thank you for having me.

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Speaker 1: Yeah. Well you know you said in your blog that

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Speaker 1: you saved $100,000 by the time you're 25 years old

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Speaker 1: and you bought your first

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Speaker 2: freehold

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Speaker 1: Property at 26. Is that right? No pressure to the

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Speaker 1: rest of the world.

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Speaker 2: Yes, that is right. And I think that when I

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Speaker 2: put out those two blog articles, I think there was

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Speaker 2: a fair bit of controversy at least in

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Speaker 2: the personal finance community, right? Because sometimes it can be

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Speaker 2: misconstrued as someone who is me like showing off for

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Speaker 2: things like that. But then I guess my main purpose

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Speaker 2: in putting out those pieces of content is to let

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Speaker 2: people know that it is possible. I come from a

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Speaker 2: humble family background and it's really letting people, especially young

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Speaker 2: people know that if you make certain decisions early on

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Speaker 2: in life it is possible to reach those targets.

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Speaker 1: What part did budgeting play in achieving those goals? Are

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Speaker 1: you very strict with how you spend your money or

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Speaker 1: not so much?

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Speaker 2: I would say that in the very early days I

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Speaker 2: was actually very strict with myself when it comes to

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Speaker 2: spending money. You look at the entire spectrum of somebody

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Speaker 2: who is very fire centric and very, very frugal to

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Speaker 2: the other end of the spectrum. It was not particularly

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Speaker 2: the most enjoyable time. There was a lot of times

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Speaker 2: where I was really, really being very careful about how

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Speaker 2: I was spending because back in those days it was

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Speaker 2: a situation where whatever money that I earned for myself,

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Speaker 2: it was not necessary just for myself, but also thinking

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Speaker 2: about the family unit, having that understanding at a young

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Speaker 2: age really made me think about value for every dollar

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Speaker 2: that I spent. I really need to get value out

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Speaker 2: of it. And it also causes you to think about

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Speaker 2: how to make your money work for you in the

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Speaker 2: most efficient way possible

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Speaker 2: and there's nothing wrong in terms of what you spend on.

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Speaker 2: It's just that mindset of, you know what you derive

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Speaker 2: utility out of and you make sure that whenever you

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Speaker 2: spend money, it is really adding value to your

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Speaker 1: life, right? And you sound very intentional about every dollar

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Speaker 1: that you spend and you make sure that it works

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Speaker 1: for you and give you so much value in your

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Speaker 1: life when you track how much you spend. Are you

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Speaker 1: very strict about jotting down every single dollar where every

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Speaker 1: single dollar went or are you more kind of a

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Speaker 1: general person where as long as my bank balance is

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Speaker 1: sort of a certain level than I should be okay.

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Speaker 2: That has certainly changed over time because in my early

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Speaker 2: 20's I literally was jotting down every dollar because back

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Speaker 2: then you're in debt almost like a survival mode, right?

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Speaker 2: Where you know exactly what your income for that month

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Speaker 2: is then when I was interning and after my junior college,

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Speaker 2: right for me to pay for my university fees because

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Speaker 2: I didn't want to take a loan.

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Speaker 2: I knew that I needed to stock aside at least

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Speaker 2: a certain amount every month and I knew that okay,

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Speaker 2: my internship job is not going to pay me now,

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Speaker 2: so I need to boost that up with teaching tuition

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Speaker 2: on the side back then I was probably teaching 7

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Speaker 2: to 10 p.m. Every day and at the same time

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Speaker 2: studying then I would go home and study until like

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Speaker 2: two years.

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Speaker 2: It really teaches the importance of grid at least. But

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Speaker 2: then in those days I was really counting every dollar.

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Speaker 2: So I was really trying to minimize my expenses. I

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Speaker 2: wasn't able to increase my income all that much at

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Speaker 2: that age.

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Speaker 1: It's interesting because I'm quite the opposite. So when I

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Speaker 1: was young, I wasn't as mindful of my spending then

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Speaker 1: a couple of years ago after giving birth after having

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Speaker 1: a kid having more expenses one month, I was like,

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Speaker 1: where did all my money go now? I really have

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Speaker 1: to watch what I'm spending.

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Speaker 1: But it sure that it really depends on your goals

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Speaker 1: in life and your goals in that period of time,

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Speaker 1: whether it's trying to save for university or you've got

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Speaker 1: added expenses because of new family members growing family and

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Speaker 1: everything like that. So for our listeners who want to

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Speaker 1: start budgeting,

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Speaker 1: Is there a formula that they have to go for

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Speaker 1: because there's this 50, rule of 50% needs 30 for

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Speaker 1: once and 20% for savings. Is that something you would recommend?

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Speaker 2: Yeah, I think with regards to that 503,020 role, I

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Speaker 2: think it is a kind of blanket formula. I don't

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Speaker 2: think that that's the best way to think about it

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Speaker 2: because everybody's circumstances are so different. It really depends on

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Speaker 2: the individual and your own personal obligations. Because everybody's income

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Speaker 2: generating ability is different. Everyone's financial obligations towards family members

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Speaker 2: or people that they are financially responsible for is different.

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Speaker 2: I wouldn't ascribe kind of like a percentage route with,

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Speaker 2: although when I was starting out I was basically looking

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Speaker 2: to do two things. I was looking to maximize my

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Speaker 2: income wherever I can while minimizing my expenses. So even

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Speaker 2: as my income grew over the years, I never

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Speaker 2: quite changed my lifestyle right? It's just that mindset of frugality.

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Speaker 2: I think underpins everything. Anyone in any situation whether or

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Speaker 2: not your high income, low income, whether or not you

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Speaker 2: are single or you have Children. I think the basic

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Speaker 2: principle of frugality which is basically being very mindful about

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Speaker 2: your money

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Speaker 2: and being able to sort of like maximize value from

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Speaker 2: every dollar you spend and also being able to balance

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Speaker 2: between what you spend on now versus what you spend

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Speaker 2: on in the future.

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Speaker 1: Different people have different goals, seasons in life and responsibilities

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Speaker 1: as well. Some of kids and elderly parents. So how

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Speaker 1: do you determine what is a want, what is the need?

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Speaker 1: Because you mentioned how you were very frugal at the beginning,

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Speaker 1: but sometimes it's also nice to enjoy your money a

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Speaker 1: little bit. Like for example we can all pack lunch

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Speaker 1: to work but not everybody has that time. What would

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Speaker 1: you say to people who are trying to be more

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Speaker 1: mindful trying to budget? But they also have to weigh

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Speaker 1: kind of how to reward themselves a little bit or

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Speaker 1: at least enjoy their hard work and their money and

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Speaker 1: at the same time still being mindful about their resources.

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Speaker 1: This

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Speaker 2: draws back to

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Speaker 2: what I said about the importance of balance between what

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Speaker 2: you spend on now versus the future because I don't

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Speaker 2: think that people should exist on both ends of the

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Speaker 2: spectrum where one is very formal and yellow. The other

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Speaker 2: one is that they are very tightened their purse strings.

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Speaker 1: So when you do your budget now, what are the

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Speaker 1: things that you keep in mind and to know that

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Speaker 1: you are on track?

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Speaker 2: I do have friends especially if they're just starting to

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Speaker 2: get into them. They are on budgeting apps at least

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Speaker 2: expense trackers because one thing that seems to come up

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Speaker 2: is their salary for the month will come in and

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Speaker 2: then by the end of the month it often is the,

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Speaker 2: they're like, hey, you know, where did all this money

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Speaker 2: especially with cards and kind of payment methods that we

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Speaker 2: have now? It's very easy to spend because you're not

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Speaker 2: kind of like reaching your wallet and taking out like

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Speaker 2: because you don't have that visual of how much you're

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Speaker 2: actually spending because it's very easy to just like tap

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Speaker 2: and even like online payments, especially when it comes to

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Speaker 2: recurring expenses, it's already tied to your credit card and

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Speaker 2: it's

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Speaker 2: going every month. So I would say that one for

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Speaker 2: somebody who's just starting out, look expense trackers like that.

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Speaker 2: If you're not already aware of how the money is

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Speaker 2: going every month, I wouldn't even be like penny pinching

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Speaker 2: or saying skip the Starbucks and things like that because

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Speaker 2: if you want to make a real impact in terms

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Speaker 2: of saving, it would be looking at what our recurring

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Speaker 2: expenses or what are like big ticket purchases that you

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Speaker 2: can actually negotiate down on.

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Speaker 1: Yeah, that's true.

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Speaker 2: Hi, I'm Stephen and I host the new season of

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Speaker 2: our podcast heart of the matter, join me in getting

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Speaker 2: right to the heart of the headlines as we speak

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Speaker 2: with experts and newsmakers to delve deep into the most

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Speaker 2: talked about news developments, look out for our episodes wherever

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Speaker 2: you get your podcasts.

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Speaker 1: What does a healthy budget look like for you?

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Speaker 2: A healthy budget for me is obviously at a very,

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Speaker 2: very baseline is spending well within your means that will

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Speaker 2: be one and if you delve further into that

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Speaker 2: knowing how much of the income that is coming in,

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Speaker 2: what are the various buckets that you put in which

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Speaker 2: is what you said, what is your needs versus your

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Speaker 2: wants versus investments and deciding for yourself, what are those

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Speaker 2: various percentages? Because I don't think people should be just like,

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Speaker 2: oh you know, I think 20% investing, you know for

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Speaker 2: somebody else where they are more willing to take investment risk,

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Speaker 2: which I think people should

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Speaker 2: then of course you kind of allocate more capital to that.

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Speaker 2: So just being conscious of what are your goals when

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Speaker 2: it comes to know how much you want to allocate

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Speaker 2: towards investment capital, how much you want to allocate towards

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Speaker 2: needs based spending which actually shouldn't shift by that much

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Speaker 2: and then the rest of it is like once like

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Speaker 2: for these wants and desires, do you really need it

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Speaker 2: or can you actually allocate more capital towards investments? How

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Speaker 1: important is investments because a lot of time you talk

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Speaker 1: about needs versus wants and you bring up a good

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Speaker 1: point that investments should also be part of that. Especially

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Speaker 1: if you are able to put some money aside.

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Speaker 2: I think it is extremely important because first of all

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Speaker 2: if the money is sitting in the bank account technically

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Speaker 2: you're losing money just because of inflation where inflation is

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Speaker 2: actually very high right now in 2022 it doesn't make

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Speaker 2: sense to see us spending power get eroded investments is

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Speaker 2: actually the, I would say like a very basic thing

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Speaker 2: that everybody should get on as early as possible.

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Speaker 2: I mean with regards to the risk return profile that

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Speaker 2: also depends on different people at different life stages as

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Speaker 2: well as the financial obligations. They need to think about

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Speaker 2: what they, how much they need for liquidity and how

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Speaker 2: much they can put in different investments because different investments

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Speaker 2: also with regards to the liquidity is very different. So

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Speaker 2: if you were to put money in real estate is

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Speaker 2: very difficult to get your money out and have like

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Speaker 2: a decent return if you're gonna do it for a

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Speaker 2: few years. Whereas for equities is a much more liquid

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Speaker 2: kind of investment.

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Speaker 1: You mentioned inflation things are more expensive now and who

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Speaker 1: knows how much higher prices are going to go, what

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Speaker 1: would you say to people who are now finding themselves

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Speaker 1: with less available money to spend, how should they manage

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Speaker 1: their budgets now where

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Speaker 1: most of the time your expenses are growing your income?

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Speaker 1: Not so much.

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Speaker 2: Yes, so it's a little bit like what I talked

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Speaker 2: about earlier, which is being very clear on what are

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Speaker 2: the outgoing expenses eh

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Speaker 2: every month is look at recurring expenses especially now, you

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Speaker 2: know we could be subscribed to a lot of let's

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Speaker 2: say entertainment kind of things like netflix, Spotify sometimes just

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Speaker 2: leave it on the credit card, you know that is

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Speaker 2: that sometimes you don't even use it but then you

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Speaker 2: know you're getting charged every month right? Just maybe like

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Speaker 2: hunkering down on those expenses that you know, there are

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Speaker 2: recurring and especially if you don't need it, then just

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Speaker 2: cut it.

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Speaker 2: People are looking to purchase a bigger ticket items, look

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Speaker 2: at what you can do to negotiate on the price,

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Speaker 2: It could be from a property perspective, what are your expectations?

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Speaker 2: Because if you want, let's say like buying a condo

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Speaker 2: versus buying like a second hand hdB, right? Especially if

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Speaker 2: you're having that discussion with your spouse, sometimes you're looking

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Speaker 2: at six figure kind of price differential. So what are

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Speaker 2: you okay with and why are you not okay

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Speaker 1: with

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Speaker 1: what are some of the biggest traps that you think

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Speaker 1: people fall into when it comes to spending because budgeting

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Speaker 1: and all these things, It's not just about how much

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Speaker 1: money you spend or what you spend. It also shows

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Speaker 1: you kind of, your relationship with money, right? How do

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Speaker 1: you treat money? How important is money to you and

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Speaker 1: how do you use it? So what would be some

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Speaker 1: of the biggest traps that you think are out there?

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Speaker 2: I would say the most,

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Speaker 2: the obvious one is from what I've seen this lifestyle creep.

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Speaker 2: I think we can all identify with your young, you're

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Speaker 2: kind of okay with living cheaply, but then, you know,

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Speaker 2: as you kind of progress in your career and you

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Speaker 2: start earning more and then you start to see your

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Speaker 2: peers driving nicer cars, having nicer bags, buying nicer houses,

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Speaker 2: they're spending more on renovations and then at some point

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Speaker 2: is this the whole keeping of the Jonas, is this

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Speaker 2: this whole comparison? And to what extent

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Speaker 2: are you doing that? I think I do see that

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Speaker 2: quite often. And the thing is it is very easy

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Speaker 2: to spend money.

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Speaker 2: It is very easy to spend money. You get yourself

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Speaker 2: in social circles where there is a lot of let's

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Speaker 2: say comparison for example, you rightly said the relationship you

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Speaker 2: have money, are you going to be spending that amount

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Speaker 2: just to impress somebody else that you actually don't really

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Speaker 2: care for? How

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Speaker 1: about for those who are married for couples, what would

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Speaker 1: you say to them and how different should they handle

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Speaker 1: budgeting versus a single person?

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Speaker 2: Oh, I think it's extremely important. I don't have the

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Speaker 2: statistics for this. But clearly there are a lot of

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Speaker 2: family arguments or even arguments between the couple even before

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Speaker 2: you have Children, where they are not aligned on how

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Speaker 2: they spend money.

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Speaker 2: And I think that from what I see in my

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Speaker 2: peers because I'm not married, so I can't speak from experience.

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Speaker 2: But from what I've seen my peers, I think it's

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Speaker 2: extremely important to have discussions about money earlier than later

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Speaker 2: because it is important to be aligned for most part

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Speaker 2: and you don't want to have this route shock where

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Speaker 2: you are with someone and in your early days, like

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Speaker 2: dating days, you're very okay with spending money or maybe

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Speaker 2: sometimes the guy is the one who's like putting all

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Speaker 2: the expenses and then when it comes down to actually

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Speaker 2: building a family together, it's not just about you and

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Speaker 2: someone else, if you're looking to have a child

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Speaker 2: that comes with it, a lot of expenses and sometimes

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Speaker 2: unexpected expenses being aligned on how you plan to spend,

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Speaker 2: being aligned and how much you want to spend your child.

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Speaker 2: Because there are cases where sometimes I see one parent

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Speaker 2: would be saying that, oh, you know, I need to

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Speaker 2: send my kids to all these extracurricular activities is extremely important.

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Speaker 2: But then the other parents like, oh no, I didn't

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Speaker 2: have all these extracurricular things, but then I turned out

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Speaker 2: to be okay and that by itself could already be

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Speaker 2: the sound of an argument,

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Speaker 1: right? It's one thing when you have a fixed salary, right?

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Speaker 1: You know how much you're making every month, you know,

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Speaker 1: your income and you can plan around that, but then

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Speaker 1: there are a lot of people who are freelancers gig

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Speaker 1: economy workers, how should they handle their budget when, you know,

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Speaker 1: their incomes change every month. Some months are better than others.

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Speaker 2: Exactly, I mean right now we are seeing that shift

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Speaker 2: towards like the gig economy

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Speaker 2: the generations before us, people could even have multiple streams

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Speaker 2: of income. So I think freelancers, they're actually in a

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Speaker 2: good position where they are actually able to have multiple

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Speaker 2: streams of income as opposed to if you are in

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Speaker 2: a salary job sometimes in your employment contract you're not

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Speaker 2: allowed to take on jobs somewhere else. If you have

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Speaker 2: a good month where you like, you make six K

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Speaker 2: in terms of earnings, but then you need to be

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Speaker 2: very cognizant of the future months, you might not be

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Speaker 2: able to earn salary.

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Speaker 2: So being aware of that and not like spending it

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Speaker 2: all at one go is very different. If you know

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Speaker 2: that you always have side of like six K coming

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Speaker 2: in every month, then maybe you can sort like budget further.

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Speaker 2: But then for freelancers where it's very choppy in terms

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Speaker 2: of the income that's coming in, they need to be

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Speaker 2: a lot more cognizant with regards to their spending and

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Speaker 2: also they also need to like forecast a little bit

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Speaker 2: in terms of their expenses compared to somebody where they

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Speaker 2: have the comfort of knowing that they have a fixed

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Speaker 2: income that's coming in and every month.

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Speaker 2: And I would say if they have that flexibility to

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Speaker 2: look at multiple streams of income and to see what

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Speaker 2: they can boost as much as possible because if you

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Speaker 2: have the additional buffer, it definitely gives you the peace

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Speaker 2: of mind.

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Speaker 1: Yeah, you mentioned earlier about how your budget now is

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Speaker 1: different from when you were younger, I didn't really budget

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Speaker 1: that much before now I do. How often do you

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Speaker 1: think people should review their budget, make tweaks to their

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Speaker 1: budget as they go along

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Speaker 2: after a while, if you kind of like do a

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Speaker 2: monthly check in, especially when you look at your expense

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Speaker 2: statements and because every month you do have things to pay,

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Speaker 2: every kind of maintenance for utilities bill. I think a

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Speaker 2: monthly check in is always makes sense because a lot

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Speaker 2: of the expenses paid tend to have that monthly nature

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Speaker 2: as well. And then you sort of like a monthly

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Speaker 2: P and L. Review if you like how much you spend.

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Speaker 2: You know, if you overspend what's the reason if you

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Speaker 2: understand and you have the comfort of knowing that you

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Speaker 2: have a little bit more buffer.

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Speaker 2: So I would say like a mili check in, I

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Speaker 2: think it sounds reasonable for everyone.

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Speaker 1: We've heard a lot about budgeting today. There's clearly no

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Speaker 1: right or wrong way to go about budgeting and what

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Speaker 1: your expenses look like will vary between people. But what

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Speaker 1: I've learned is the importance of having an overview of

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Speaker 1: where your money is going and adjusting my expenditure based

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Speaker 1: on my goal. So thank you so much for your

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Speaker 1: time Judith.

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Speaker 2: Thank you so much. Thank you for having

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Speaker 1: me

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Speaker 1: and thank you to our listeners. If you've enjoyed money,

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Speaker 1: the building Financial fitness podcast, which is available on the

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Speaker 1: or have feedback, write to us at c n a

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Speaker 1: podcasts at mediacorp dot com dot SG. The team behind

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Speaker 1: money talks is Joanne, chan Jacqueline, chan Danieli and Christina robert.

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Speaker 1: I'm Sarah called E. Thanks for listening.

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Speaker 1: Money talks is brought to you by OCBc Bank.