Many of us, today, are holding tight, holding dearly to our CASH, because of the economic uncertainty that is looming wide on us. 🙁
If YOU read yesterday’s straits times’ newspaper, under the finance section, they recommend YOU to keep at least 12 months of YOUR monthly expenses as YOUR emergency funds instead of the usual, recommended 6 months monthly expenses in YOUR bank account.
I think that is a prudent measure & I will like to add on to it 🙂
You see….I believe, overall, in life, many of us have GREAT AMBITIONS to fulfil.
Some of us are entrepreneurial, will love to start our dream business. Some are career minded, looking forward to climb the corporate ladder. Whatever route or path, you CHOOSE, there is 1 BIG PURCHASE that you will do in your life.
I will usually recommend all my clients to settle this 1 BIG PAYMENT as soon as possible before spending on other stuffs. That is….
1) Paying For Your House
Try to pay your house in full as soon as possible.
Yeah…I know, for some adventurous people, they will say, “Helmi….mortgage rate is so low. May as well, I invest the money, and get higher returns”.
The one philosophy that, I shared with all my clients, is anything you want to do, PROTECT YOUR FAMILY FIRST.
This includes buying life insurance, buying hospitalisation insurance plan, and the most important, pay off your house loan as soon as possible.
This is because, in life, many unwanted things can happen. Today, you may be making lots of money, running your own business, or perhaps earning BIG MONEY, holding an enviable corporate position in your company, BUT no one can guarantee you such blissful fate in the upcoming years.
At least, should anything unwanted happen, you know, you got life insurance, you got hospitalization plan and you got YOUR HOUSE all secured.
You then only, depends on your 12 months contingency savings in your bank to pay for your basic necessities.
You know, I always hear people say, those who indulge in business, are taking BIG RISK. In fact, I will say, most of them take “calculated risk”.
Many of those businesspeople, I met are super risk averse. They do anything ONLY with a clear goal and a well developed strategy.
In fact, if you follow what I share with you, in this article, you are taking calculated risk because all your fundamental needs are well taken care of, should your business or career failed. YOUR BOTTOM LINE IS TAKEN OF. You can explore, can indulge in any field of endeavour FREE FROM WORRY & ANXIETY, because why?
Because your main structural support is already in place. You have done your homework. You have a plan for your worst case scenario.
Only then, you can start planning your financial life in a more adventurous way! 🙂
p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…
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Helmi,
Agree with you. First thing for your family would be to clear off the home loan. If anything happens at least your family has a roof, so to speak.
I am thinking most people dont bother not only to keep money with them as long as possible but also the feeling the home is not entirely theirs. I believe a HDB flat is a 99 year lease or something.
vijay >>> Exactly Vijay! 🙂
Parents need to EDUCATE their young kids that SAVINGS is a MUST MUST in life.
In fact,Maslow Hierachy Needs Theory states that after fulfilling your physiological needs, SAFETY needs came in.
Safety needs encompassed job security, shelter, savings accounts, insurance policies, and more.
http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs#Safety_needs
That is why you need to start business young. Not when you have a family which can burden you. Cos tendacies are you will fail for the first few business or years. Its true that 9/10 business fail within the first 5 years. Hence every entrepreneur must also understand why this happens and needs to be prepared for it when it happens.
This 12 month savings is actually not new, the prophet Muhammad saw mention this in one of the hadiths too. Stated there, he would leave 12 months of provisions before he leaves his house to trade in other countries. Anyone needs this to fall back on when something happens. Hence its important that we have this.