Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Tuesday, 1 December 2015

Li Ka Shing Advice - SG Version

16:31 Posted by cheez 2 comments
http://e27.co/li-ka-shing-teaches-buy-car-house-5-years-20150408/



There was an article in the past that went viral.
It talked about the advice given to young people by Hong Kong's richest man - Li Ka Shing.
In the article, he talked about splitting our pay into 5 parts, each for a different purpose

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30% - Living Expenses, paying for food etc
20% - Socially, paying of phone bill + creating connections
15% - Learning, buying of books or signing for courses/training
10% - Travelling, go overseas once a year to broaden your horizon
25% - Invest, SAVE to INVEST or start a Small Business

He used a guy earning RMB 2,000 (roughly SGD $400) as an example of how to split the money.
His example is for a people living in HongKong or in China.
In my perspective, there is some parts I think we can change to suit it to Singapore's context.

The allocation below is for a Singaporean whose take home pay is $1,500 after CPF deduction.
Some adjustments were made to the allocation and I do not recommend following strictly to the guideline because every individual is different and every month is different.
If you spend more on 1 month, make sure to balance it back the other month.
I think a little flexibility in the allocation is okay, but not too big a difference, less than 5% movement range for each category.
But do try and keep the last part (INVEST) intact or increase if possible, because that is for the future, YOUR FUTURE!

55% ($825) - Living Expenses, paying for food, transport etc (a)
10% ($150) - Socializing, paying of phone bill + creating connections (b)
10% ($150) - Learning, buying of books or signing for courses/training (c)
10% ($150) - Travelling, go overseas once a year to broaden your horizon (d)
15% ($225) - Invest, SAVE to Invest or start a Small Business (e)

a) The unfortunate part of not earning much is that a huge portion of our pay goes into necessities, rendering us with minimal for other things.
Items like groceries, utilities, meals etc often take up a huge portion of our pay.
Find ways to cut cost and keep them within the 55% budget!
DO NOT OVERSPEND!

b) Li Ka Shing advices us to treat 2 person who are able to help us in our career to a meal each month. Allocating about 3% of your pay to treat each person sounds reasonable. And hopefully if your phone bill is not too expensive, it would probably be less than 5% of your pay

c) Singapore's National Library has got a good variety of books, thus there is not really a need to buy books. Save that money for other use, go to the library to borrow more books to read and learn.
There are also currently a lot of e-courses online that are free, some even available via Youtube. Do make use of these sites to learn and save on the learning expenses.
Of course, if a certification is required, then go for the paying courses that provide certificates.
The government is also providing a $500 subsidies for qualifying courses, make good use of it!
Money saved here should go to the 'Invest & Save' portion

d) Depending on your income, travelling every year might not be possible, unless its to neighboring countries. Either it is travelling every 2 year OR you could roll over your money to the Invest or Learning portion.

e) Read up on basic investments, long-term investments. Read up on our post on investment under our 'Investment' tabs to learn more!

Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?

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2 comments:

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