It’s that time of year again: graduation season—when the air is thick with anticipation and the promise of new beginnings. New university graduates step into the next phase of their lives, and the “so...now what?” feeling tingles. A realisation that the complexities of life after college starts to settle. Are there a lot of decisions to make? Absolutely. Is it exciting? Without a doubt. Is it scary? It can certainly be daunting. It is the threshold of a new chapter, filled with endless possibilities and uncharted territories.
I remember leaning into that feeling myself when I first graduated. One’s transition into the working world marks, for many, as the start of independent financial decision-making and one’s financial journey. Prior to this, financial decisions were likely made for us, but when the first paycheck comes in and decisions about why you should consider getting a credit card, the specifics of shifting from your parents’ health insurance, and how to best utilise your savings come into play. Suddenly, (for the responsible adult, that is), with the concept of financial self-empowerment, comes considerations about setting up retirement savings to managing debt and starting your investment journey.
Fast-forward to today, I’ve been in a cradle-to-grave, womb-to-tomb sort of business for the past nine years as a financial planner and business owner. One of the ancillary- but-meaningful parts of my career is the unique vantage point from having different client conversations across different demographics. That has given me a valuable perspective on wealth, success and the financial habits that shape our lives. I get to be next to my clients in my age group; to witness and grow alongside their dreams and aspirations as I build my own. At the same time, I work with successful business owners and professionals in their 40s and 50s—a glimpse of what sustained success looks like and the pathways they took to achieve it. These interactions have not only broadened my understanding of financial planning but have also enriched my ability to empathise with diverse life experiences and ambitions. I don’t want to be preachy—and I do think financial advice and planning need to be catered to the individual, because humans are complex—all of us bringing our own set of lived experiences, opinions, idiosyncrasies into our worldview on money. But I thought I would share three consolidated musings, which come from some of the commonly asked questions and my lived experiences, on building wealth from scratch.
Money is a lot about psychology and the behaviour attached to it. It can be daunting, but you don’t need a CFP to build wealth. In fact, having a degree in finance or financial planning is moot if knowledge isn’t applied. Start with being very real with who you are, where you are at, what your goals are and how you’re going to take action towards those goals. It could be about having that conversation about what money means to you, and if the pursuit of wealth is actually important. You could be a fashion writer or an industrial engineer with zero interest in anything finances-related. Or you could be an investment banker with a CFA who is well-versed in corporate finance but with no time to look at your own. As long you have a goal and decide to retire by 55, even if financial planning isn’t the most top of mind, you’ll want to have that real talk about what you need to be doing constantly to reach your goals. The earlier we realise that we are responsible for ourselves, and that we are ultimately in a primary capitalist (and meritocratic, thankfully) society, then the sooner and better off we will be.
You don’t strictly need a financial planner because if you’re meticulous and naturally good with these sort of things, you should be fine. But sometimes, having another—a good financial planner who understands you as a person, who asks the right questions—to be a sounding board for ideas and provide qualified advice really can help. You are not worse off from not having engaged one. But if you can be better off, why not?
Most people who do nothing wrong will do nothing. Financial planning can be a somewhat un-fun conversation but it is a foundational core tenet of our life if we want to see good long-run quality-of- life outcomes.
We don’t choose the hand we are dealt in life, and some people have more opportunities than others. But it’s not a competition and we owe it to ourselves to decide how we want to play the game.
I often tell younger clients that a large determinant of where wealth will come from (assuming it wasn’t inherited), is the jobs they take and/or the things they build. The early years after graduation, our career choices, entrepreneurial endeavours, and even the skills we develop can have a profound impact on our financial future, much more so than whatever investment opportunities we take. Sure, interest compounds over time, but a good financial plan should also look at career progression. Making it a point to change jobs with a 25 per cent pay increment every four years, with an employee share options programme or starting a side hustle that creates an additional stream of income and a potential multiplier effect has a much larger effect on one’s financial future than trying to trade a SGD5,000 portfolio of savings to achieve 10 per cent per year.
We should still set a budget and put funds aside for these things, but the focus in the earlier years should be placing ourselves in positions where we are in the right rooms, to build the right skills and to capitalise on the opportunities with trusted individuals. From a risk planning perspective, it makes complete sense to protect one’s ability to earn their income adequately through the use of insurance. Leverage doesn’t just come from banks; it also comes with the influence and positive long- run positions we put ourselves in.
There is a Chinese proverb that states that “wealth does not pass three generations”. Another version of this saying, of Scottish origin, is “shirtsleeves to shirtsleeves in three generations.” These proverbs reflect the idea that wealth gained by one generation can be lost by the third generation. In essence, the first generation works hard to create wealth (from “shirtsleeves” or manual labour) and the second generation benefits from and manages this wealth. But by the third generation, that wealth is often squandered and they end up back in “shirtsleeves” or having to work hard all over again.
Increasingly, though, one effective solution to this problem is the use of life insurance and trust structures as tools for generational wealth transfer. Families can create a legacy that multiplies generational wealth in cost- effective ways. Tools and structures which were once accessible by the ultra-wealthy, are also now increasingly democratised. Education and financial awareness are rising, along with the availability of qualified professional advice. And trust structures can be utilised to manage and protect family assets, providing clear guidelines on how the wealth should be handled and distributed. By combining life insurance with well-designed trust structures, families can mitigate the risks of the third generation falling back into financial hardship, thus breaking the cycle and ensuring that the wealth created endures.
Yet, why doesn’t everyone for whom it makes sense to do this, do this? From my professional standpoint, such issues can now be easily solved, but again, most people who do nothing wrong, do nothing, and that is what’s probably wrong. The perceived idea that these things are complex (they can be), coupled with the technicalities of it all possibly bore most people into inaction; again characteristic of the human condition.
In the end, one’s journey in building wealth is but one part of it. Preserving wealth also requires a commitment to proactive planning and a willingness to utilise available resources. One can build from scratch but keeping it and building from strength to strength is where true financial wisdom and discipline come into play.
