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A young father of two says money not enough.

Friday, July 1, 2016

Hi AK,

I am 37 this year. Married with 2 boys, 6 and 2 year old 

My wife not working and take care of our children 

Recently I have been feeling very fan , keep thinking money not enough to bring up our kids , I had a job which I don't really like , I am still here because I need to bring home an income to support this family.

I need advise from u. If now 1 got 100k in FD, how to make better use of it. Thanks AK


Hi D,

Welcome to my blog. :)

While keeping a look out for a better paying job which you might enjoy more, think about how to reduce expenses at home and increase income in other ways. Make sure that the ways you have identified to increase income involve doing things you enjoy or at least don't dislike. Of course, if you do this, what you have will be more savings. Having more savings always makes people feel better.

Ask if that $100K in FD is your emergency fund. At age 37, you should have an emergency fund that will cover regular expenses for 12 to 24 months. The excess, if any, you could invest for income. You might want to split the excess into half, investing half now for income and the rest for in case the stock market crashes. Which stocks to invest in? I will leave that to you. :)

Don't be "fan" (frustrated), to use your word. You have something precious and that is your family. :)

A well known local investor, Dr. Michael Leong, said before that family is more important than anything else (including money). Don't forget that.

We only need so much money in life. The rest is for showing off.

Know how much money we need and work towards that. 

Do what you need to do for your family.

Don't compare with others.

Unless we are the richest person in the world, there is always someone richer.

Related posts:
1. Greater financial well being is not beyond us.
2. How much should we have in emergency fund?
3. Free "e-book": Do not depend on wage increases...


caelitus said...

Daniel Yap of The Middle Ground has 6 children. Over an article and interaction with his readers, you get a glimpse of how he manages. Once we have children, it is always a matter of deciding between needs and wants. Without details, the first place to start (usually neglected) is with the expenses. You will be surprised with what you can mine there.

Once that has been sorted out, the cash flow will be freed for you. Do review your insurance coverage strating with hospitalization insurance and then term insurance. Many people have posted about their Medishield experiences and one thing that you can pick up is that an as-charged policy provides you with much needed assurance for a more comfortable care (to minimize your downtime) and protection against big surgical bills. Given your age, your best bet for money-is-enough-for-children-if-anything-happens-to-me scenarios is to pad your coverage with a term policy. How many years' income should we cater? As much as we can afford. Remember the intent is to replace your income when you are gone. As we grow older, that coverage can reduce to reflect the decreasing productive years we have. Insuppose you are a NSman and can qualify for the Aviva Term Insurance. Rebates are given annually and it can be as high as giving you a 20+% discount.

With that out of the way, your cash flow can then be proportioned to the wealth-growing activities that you like. Do read up on AK's triangle of growth where he shares about risk proportion. that can be a good guide to see where your 100K can fit in once you consider your investable assets, liabilities AND emergency funds. While mulling over it, I feel it is important to know why we are growing our wealth. is it for your retirement, is it for your children's future and in what proportions. That may skew the shape of your pyramid.

Sounds like a lot of work but once you get the structure up, it is a matter of tweaking it in your periodic reviews. not to mention when you have a plan, it makes you less worried and frees up bandwidth to tackle other issues.

What works for some may not work for others due to context. Observe-orient-decide-act. I wish you all the best in your journey with your family.

AK71 said...

Hi caelitus,

Thanks very much for weighing in on the matter. I am sure many will benefit from your words of wisdom. :)

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