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Beginner's Journey: Financial Literacy

Updated: Jul 16, 2020

Do you understand your financial situation well enough?

Let us recall the times we’ve spent on something we thought we needed.

"20% off for your second purchase? Spend a minimum of $50 to qualify for free shipping?"

I am sure that at some point, we have been tempted to buy that one more piece of clothing, snack or product, thinking that we’re saving more. Realistically, we are spending more instead! It was discovered that the bottom 20% of households spend more than they earn. But let us move forward from there.

But first, what is financial literacy?

Being financially literate means that we understand and practise healthy financial management skills. The mantra "Save more, Spend less" provides much truth to this present reality we are in. With the ever-rising prominence of e-commerce and ease of satisfying our need for retail therapy, we need to strike a balance between fulfilling our needs and wants. In an OCBC survey done in 2019, only two-thirds of 866 students aged 16-28 managed to stick to a budget. Why is it that difficult and what can we then do?

Why is financial literacy so important?

Are we saving too much? Do we know where every dollar of our income goes?

There is no one fixed rule on how we should handle our finances, thus financial literacy is key. Just like how we must understand how the steering wheel directs where the car goes, we must tune our inner financial literacy compass to guide us to what we want to achieve.

The topic of money may be quite sensitive and hard to discuss due to varying meaning to different people. It can be hard to be on the same page. Author of The Psychology of Money, Adrian Furnham, identified that money can be treated as a form of freedom to some while it acts as a sense of security to others. A research found that couples are more willing to discuss infidelities than how to handle their family finances. However, this lack of open communication may lead to ignorance and thus it is important to talk to our family and peers about this topic.

When is a good time?

Our concern is to emphasise its importance during the teenage years. This is a point in time where they start to realise their independence, and would then embark on a change of their lifestyle and spending habits. Which will undoubtedly have trickle-down effects on their future. We want them to understand that a balance is essential in healthy financial management. Starting off with a good budgeting framework, cutting down on unnecessary expenditure and successfully saving a couple more extra dollars. These are just some of the multitude of areas which financial literacy encompasses.

Here are some 3 key fundamentals of financial literacy to get started:


Budgeting starts by creating a plan to spend your money, giving you an insight into whether you have sufficient money to achieve what you want to do. The idea of budgeting may seem very daunting as it involves having to plan ahead and having the discipline to follow through. This can be hard for teenagers especially, as they are packed with activities every now and then, they would be tempted to spend more or incur spending unplanned for. Thus, it is all the more important to keep yourself accountable as you may be spending well beyond your means. Always have a plan for your money.

A good way to start getting comfortable with budgeting would be to use the applications already available - there are plenty to suit varying needs. If not, feel free to experiment with spreadsheets, writing it down on a notebook or any other methods suits you best. In the long run, budgeting will help you save money which you might have not allocated properly, which will be vital for emergencies and rainy days.


“Do not save what is left after spending, but spend what is left after saving.”

- Warren Buffet

The detriments of reckless spending outweigh the perceived benefits, especially so if one is spending beyond their means. Start saving for something that you want, instead of borrowing for the instant gratification. Save for it if you really want it.

It is important that you define a clear purpose or a set goal when saving, which will heavily influence your motivation to do so. Of course, make sure that these goals are SMART, that is specific, measurable, attainable, realistic and time-bound which allow us to track our progress more accurately and easily. Take time to celebrate the small milestones and wins along the way when you meet your saving goals.

Remember, life doesn’t always play out how we plan them to be! Hence, do remember to save for rainy days or emergencies. Despite this, you can never be certain that the money you save now will even be enough to save you.

The present COVID-19 pandemic has surfaced some underlying concerns. It was conventionally thought that we should set aside 6 months worth of savings to sustain us in a time of crisis. But is that amount enough, especially with such crises?


In order to build wealth, one needs to understand where one's money is going. Hence, tracking expenses is the first step to better visualise your spending habits and taking control of your finances.

Set a time to record your expenses, such as at the end of every day. Make use of expenditure tracking templates or the expenses apps available (there are plenty online) to understand your personal spending habits. Are you over or under spending in certain areas? If you are not yet sure, now is the time to distinguish between needs and wants, as well as planned and impromptu purchases.

After all, our expenditures are a reflection of our lifestyle. Having insights into our personal spending habits will surface areas which we may have overlooked. Take the time to review your allowance and start budgeting it accordingly.


Good spending, budgeting and managing finances may seem like a daunting task. But it does not have to be! There are many articles which provide financial opinions, but there are few ‘hands-on’ examples to guide us. Why not make good decisions every single moment?

Financial literacy is widely understood, but not always well practised. Are you truly a master of your own personal finance? Let us seek to maximise the resources available to us as early as possible to make the best decisions for our future selves.

Join our mailing list (below) to be updated with more financial nuggets as we post once every week! Coming up next are details of the three financial pillars identified here - budgeting, savings and expenditures.

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