6 quick money tips for women
Certified financial planner Joanna Leng is here to help (and give us a reality check)
Whether or not you want to talk about money, it’s there – like a spectre. It guides most of our actions. At least it does mine. Sometimes I feel like I’m being held hostage by my budget, to be honest.
Sometimes I also wish that schools taught kids more about financial responsibility and financial institutions, how to manage money, and how to deal with debt. I don’t remember ever being taught any of those things outright. Maybe they do now?
But even if you and I are all grown-up, it’s not too late to learn something. That’s why I’m glad I came across Joanna Leng, a Singapore-based certified financial planner and financial safety advocate for single mothers and divorced women. She believes there’s still time, and that we can always hope (and cope).
“Financial literacy doesn’t have to be in-depth understanding; it’s about knowing the common terms used, and what they roughly identify with,” she says.
“For example, when you apply for a loan, you get to know the applied interest rate (AIR) and the effective interest rate (EIR). A zero-interest loan will tell you the AIR is 0%, but the EIR can be different.”
Sounds good so far. What about financial planning?
“We use the word ‘planning’ every day in our work or personal life. We have a goal to reach in a project we’re working on and we plan the milestones, or a holiday and we plan the itinerary.
“Financial planning is a bit different,” she continues.
“It starts with highlighting the common goals the people around you have financially, which is something many do not think about because we are distracted by day-to-day personal and work plans. Financial planning seems too long ahead to give much thought to it.
“Therefore, financial planning means identifying and increasing the awareness of the common financial goal one might likely have in a lifetime, and plan for it.”
And then there’s also financial safety, which I think most of us don’t hear about that often.
“Financial safety is identifying the financial aspects in life that make me feel safe. You identify the ‘what is’ and quantify it with ‘how much’, with the aim of securing the quantifiable amount.
“For example, I know I need a monthly income of S$5,000 for retirement, and this is sort of a safe amount for me based on my fixed expenses. So how do I make myself secure, knowing I will always have this when I stop working? A solution or combination of solutions is then used to secure the amount before I stop working.”
Why are these three so important to learn?
Aside from protection and security, that is, especially for women and single parents.
“Often women take a backseat when it comes to finances,” Joanna answers.
“To grow a family, both spouses take an important role. You see, men are more geared towards growing the wealth, while women in general will tend to gear towards safeguarding and securing. Both are important because you cannot only grow without having risk management in place, and you cannot progress if you get too risk-averse.
“Working together actually complements each other, giving the finances a well-rounded approach. Therefore, women are equally important when it comes to contributing to a sound financial plan within a household.
“As an individual or single parent, you need to be able to play both roles: the growth and the securing parts,” she adds.
“It’s not easy, but it can be done; and when balanced well, it will make you feel a sense of relief that working for two-thirds of your life for money won’t be in vain. (Think about how many parents are not well-prepared for retirement.)”
How do we convince women and single parents to take their finances and financial safety seriously then?
And how do we get them to take an active approach, even if they’re not going through any hardship?
“I think you need to be motivated. You know that money is being earned by you trading away time, where you would love to be somewhere else doing something else instead,” she says.
“If you are the boss of your own company, you have milestones and goals you need to achieve for the business to run, and reviews in place to assess if something is working or not.
“The same goes for money – always review it and give it a goal. Mine is to have S$300,000 a month as passive income. To achieve my goal, I can either save more or invest more. It is not that straightforward, but the idea is there; you’ve got to do something about it. And when I review and realise that my goal is too unrealistic, I can either sacrifice my goal to something smaller or sacrifice my spending to keep the goal.”
Misconceptions about money and financial planning
According to Joanna and from her experience, women and single parents need to overcome these ideas:
#1 Who you are without a husband
“As a single parent, I always get the impression that without a husband, I’d be dead broke – like financial assistant kind of broke,” she muses.
“To be honest, I was earning S$1,800 a month with two toddlers. But now I have my own place, I eat sushi in restaurants and I go on holidays.
“It is not fancy – not much – but I am getting better. Therefore, this is a stigma women and single parents first need to get out of. It is all about making progress, and financial planning is not that difficult to comprehend if you do spend the time as you would in knowing your work when you change a job, move to a new country, or take up a new course. It requires just the same effort. The only reason why it is difficult is just an excuse you give yourself, just like how I give excuses for not having enough time to exercise.”
#2 Finance is a man’s job
“This is not true. It is your job – why do you not want to learn and understand more of something you’re going to work your entire life for? It is like going into a marriage and not wanting to know that person, or taking up a job and not wanting to learn. If you can work and earn an income, any kind of income, then you can learn financial planning and take charge of your finances and be both secure and independent.”
Joanna’s tips for planning and safeguarding our finances
This is what she’s learnt so far.
#1 Always have an expense sheet
“Have it somewhere readily accessible. I use apps to help me manage my finances and it prevents me from overspending. I also round them up to the nearest dollar.”
#2 Save up your bonus and invest in education with your pay increments
“I shared how I only earn S$1,800 when my children were less than one and three years old. I only had a diploma back then. When my salary increased to S$2,500, I used the increment to take a part-time degree, paying it in instalments.”
#3 Have different “pots” of monies
“I separate my salary into different ‘pots’ and they do not interfere with each other,” she points out.
“What I have now is a bank account where I put monies aside only for insurance, one for fixed expenses, one for spending, one for savings, and one for keeping away the bonuses of additional funds I earned during employment.
“I separate them so I won’t ever need to compromise on any ‘pot’. For example, I will always have money for insurance, always have money for my fixed expenses, my savings, and if I have extra, I can spend it, and the additional bonus will form part of my retirement and travel expenses.”
#4 Keep your expenses “regular” for things like transport, food and utilities
“All of these fluctuate on a monthly basis. But what I do is, I set aside a fixed amount every month for these. That’s why, at some months when I do not spend as much, it is kept there in case of months I do need them and exceed my budget for that month.
“With this approach, I make my expenses more predictable and regular.”
And the best financial lessons she’s learnt?
#5 Money is not evil
“It’s merely an amplification of who you are. If you are an evil person, you can use money to manipulate people; but if you are a kind person, you will use it to help others.”
#6 Not all loans are bad
“It all depends on how you use it. I used to use my credit card, which offered interest-free instalment plans to pay for my private school. With that, I calculated my increment in salary and worked it backwards to know how long I needed to pay for my course fees.
“I made it in such a way that I did not need to pay interest, yet get a loan, pay it off monthly with my salary increment, and continue to upgrade myself. By the time I finished my course, I was debt-free, I got my degree, and paid zero interest on a study loan.”
Is there such a thing as “too late” when it comes to bouncing back and reassessing our finances?
“I believe there is, but it is still better late than never,” Joanna says.
“Planning and reaching a destination will always take time. Time is the most expensive commodity, because you cannot buy it back once it is lost – you can only save some by being efficient.
“It is like an assignment where the due date is tomorrow. I cannot wait till the day after and say I want to go back to yesterday, but I can try my best to do what I can today for my deadline tomorrow. It might not be as good as if I had started on it a week ago, but it is always better late than never.”
Lastly: What are some of the basics that you feel we need to know or master when it comes to our finances?
“I think it is being honest with yourself in identifying your money habits like spending, saving, the willingness to commit and change, as well as having an open mind to learn and understand current available tools.”
Surely we (you and me) have time for that.
Find Joanna on LinkedIn.