Once upon a time, there was a poor farmer lived in a rundown farm with his family. One morning, as he was in his barn, he found a golden egg in the nest of his goose.  He was excited and brought the golden eggs to a goldsmith. He tested the egg and told the farmer that it is pure gold. The farmer sold him the egg and went home with a bag full of money.

He went home and celebrated with his family. The next day early in the morning, the whole family went to the barn to see whether the goose would lay another golden egg. And to their surprise, another golden egg was laid in the nest. Since then, the farmer would go to the barn every morning to retrieve the golden egg and sell. Soon he became very rich.

But this farmer was a greedy man. He began to ask himself: “Why did the goose lay only one golden egg a day? Maybe there are many more eggs inside the goose. He was also curious how the goose could produce only golden egg?   He became more impatient by the day. Finally, one day he hurried to his barn and cut the goose into two with his chopper. But to his surprise, he found a half-formed egg cut in two. What’s the moral of the story? Don’t kill the goose that lay the golden eggs. I believe you must have heard this story, but how many of us actually put into practice the lesson learnt.

The goose represents money capital and the golden eggs; the interest earn. Without capital, there is no interest receivable. Many people tend to spend more than they earn. In addition to their education loan repayment, they splurge on new gadgets and branded stuff to keep up with their peers after graduation. In many cases, they incur debts to finance their lifestyle by living on credit. They can never raise capital to earn interest. They kill the poor gosling before it can even start laying any golden eggs. Spend what is necessary and invest the rest. Set aside at least 10 % for saving before you start spending on your pay day. You’ll be able to have a ‘goose’, or money making machine that gives you passive income eventually. Otherwise, you will be the ‘goose’ or the money machine yourself, regardless of how much you earn.

To help the citizens to save, the Singapore government makes it mandatory for all Singaporean employees to contribute a certain percentage(between 16% -18%) of their monthly gross salary into the Central Provident Fund(CPF). The good thing is that it is also mandatory for all employers to contribute a certain percentage (about 14%) into the CPF accounts of their employees. There are three sub-accounts in this fund, viz the Ordinary Account, Special account and the Medisave (medical) Account. Interest is payable for all these savings and they can only be used for the stipulated purposes. Upon reaching a certain age, the money will be released to the account holder from age 55 onward progressively. Most Singaporeans use the money in this fund to buy their first residential property and pay for the mortgage loan through monthly installment. I am thankful for what our government has done for us. Since my growing up years, this habit of saving has been cultivated and I am glad to say that I have no problem saving.

You too can save if only you discipline yourself and make it compulsory to set aside a fixed sum of money for saving. It may be difficult initially but don’t give up. Even cent you save counts. Start saving your loose coins in a clear canister, or a strawberry jam container. You may also instruct your bank to transfer a fixed sum from your salary bank account to another saving account of a different bank. Remember not to withdraw from this saving account for any purchase; otherwise it would become a white elephant.

It is wrong to think that you can only save when you earn more, and that you do not need to change your attitude towards saving. That means you refuse to take responsibility for your own future. It’s like saying: ’I can’t save with little income now, because I can barely make ends meet. Once I have more money; I will start saving.’ Believe me that it will never happen. If you can’t save with the little earnings you have, do you think you can save with a larger amount of income? You can earn as much as you like, your financial situation will not change. If you can barely get by on what you earn today, what make you think that you can get by if you were to earn double the income in future? You need to change your attitude towards money and saving.

The percentage of saving doesn’t change. If you were to earn $1500 today and save 10% of it (i.e. $150) is easier. With increase earning, to save the same 10% of $15,000 (i.e. $1500) is even harder because the saving amount is higher. The higher the income, the heavier the percentage weighs. In fact, it is less difficult to save $150 and start the habit of saving now rather than to put away $1500 in the future. Therefore, start saving NOW. Regardless of the difficult situation you are in, make the choice to start saving today. Even if you are currently in debt; you still have to start saving at least 1 – 2 % of your net income every month.  Use the balance net income to pay for your monthly expenses and debt repayment.  Eventually you will not only pay off your debt, but accumulate a substantial sum of saving simultaneously.

The crux of the issue here is to start saving early.  The best time to save is when you received your first salary. As a young working adult living with your parents; you can save on rental and other household expenses. My daughter started working full-time after graduation in February. She gave me about 32% of her gross salary. After contributing 16% into her CPF account, she has about 52% balances for herself. Out of this 52%, she is setting aside money for daily expenses, insurance premium, and investment. I often remind my children that the first big item they should buy after working for some time is apartment; not car, new iPad or any other gadgets and branded stuff. As parents, we should set good example for our children to follow. Good habits are easy to cultivate when children starts young.

The main reason why most people don’t change their financial habits even if they earn more is because they don’t have the discipline to save. They justify their purchases with their attitude towards ‘needs’ and ‘wants’. An attitude that stops people from saving is ‘I need this and that’. They are not sure of what’s real needs and wants.

When my son was thirteen years old, he came home from school and told me that he needs a smartphone. His justification was that a smartphone allows him to access internet in school. I explain to him that his current mobile phone serves its purpose. It is not necessary for him to have a smartphone to access internet. I refused to oblige as it is not an essential need, but something that is nice to have. I love to give what my son asks, but I didn’t want to send him the wrong message and buy him stuff that he does not need then.

Many people think like my son and they often justify for their spending. You must not confuse your “essential needs” with your wants’, and quite often our essential expenditure will always rise to meet the level of our income. The most stupid excuse for an unnecessary expenditure is: ‘I need it. I must have it otherwise I will keep thinking about it’. In fact, we need very few things to live decently. We often find some ‘needs’ and make excuses for ourselves to go ahead with the purchase.

Warren Buffet is the number two wealthiest man in United States of America. According to Forbes, his net worth is USD $5.3 billion as of March 2013. How did he become so wealthy? His prescription: save and invest. He makes money from investment, save and invest some more. Since young, Buffett was interested in making and saving money.  At the age of 11, he started buying shares. While still in high school he was successful in making money by delivering newspapers, selling golf balls and stamps, and among other means. He saved what he earned and grows his wealth.

If you were to save and invest like Buffett, I believe your wealth and mine will grow even though it may not be as successful as he did. Besides, how many people in the world can match his great acumen in both business and financial investment? Not many!

If you have read books written on Buffett, he said that whenever he invests his money, he adheres to the following three rules:

  1. Protect your capital
  2. Remember rule number 1
  3. Never forget rule number 1 and 2

Investing is risky if you are not equipped with the relevant financial education and training. Invest with your financial goals in mind and adhere to the three golden rules which Buffett advocates.  In my opinion, you should never borrow money to invest in something that has high risk. It is risky and you may end up with financial woe. Mr Market has no mercy when he decided to crash! In the worst case, you are reluctant to cut loss, hoping for the market to turn around. Unfortunately, you may be wrong and the market continues to head south for the next two weeks. You receive margin call and you are to cover the loss. That’s how some investors lost millions of dollars and declared bankrupt.

If you are like me who has no time to watch the market, dislike monitoring, read chart and study financial statements of companies; do not invest in stock, commodity or trade in the Forex market. Believe me; you are likely to lose money over time.




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