First of all, give yourself some credit? Reaching this stage—where your hard work is paying off, and you’re starting to build wealth—it’s no small thing. You’ve earned it. But here’s the thing: with more money comes more responsibility. If you’re not careful, some common financial missteps can trip you up.
It’s very normal at this stage—what they call the “emerging affluent” stage. Many people face the same challenges. The good news? These mistakes can be avoided, and I’ll walk you through how to do it.
1. Over-Relying on High-Risk Investments
You know how it is—someone tells you, “Crypto is the future, man!” or you hear about a “sure-win” investment everyone’s jumping into. Honestly, it’s very tempting. But you need to be careful. High-risk investments like cryptocurrency or speculative stocks can give big returns, yes, but they can also wipe out your money just as quickly.
What you can do instead: Diversify.
Don’t put all your eggs in one basket. Diversifying your investments spreads your risk and increases your chances of steady, long-term growth. Here’s how you can do it:
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Equities (stocks): For growth.
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Bonds: For stability and income.
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REITs (Real Estate Investment Trusts): To earn dividends, plus exposure to property.
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Singapore Government Securities (SGS): Super safe and reliable.
If you’re not sure how to start, it’s okay to ask for help. Find a financial advisor who’s licensed by MAS (Monetary Authority of Singapore). They can help you build a portfolio that matches your goals and how much risk you’re comfortable with. Better to plan properly than just hantam (guess) and hope for the best.
2. Upgrading Your Lifestyle Too Quickly
This one, wah, very common. You start earning more, and suddenly, everything feels like it needs an upgrade. Maybe you’re thinking, “I’ve worked so hard; I deserve a better car,” or you start splurging on luxury holidays, branded goods, and the works. Look, I get it. It’s natural to want to enjoy life a bit more when you’ve started making good money.
But here’s the trap: if your spending grows just as fast—or faster—than your income, you’re not really building wealth. You’re just living paycheck to paycheck at a higher level.
What you can do: Find balance between lifestyle and long-term goals.
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Set a budget. Use tools like Seedly or MoneySmart to track your spending. This way, you can enjoy some indulgences but still have enough for savings and investments.
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Focus on building assets first. Before splurging on lifestyle upgrades, think about upgrading your financial portfolio. Stocks, property, CPF—these are things that will grow over time and give you peace of mind later.
Enjoying today is important, but don’t sacrifice your future self just for the sake of short-term pleasures.
3. Not Aligning Insurance and Investments with Life Goals
Life changes, right? Maybe you’re getting married, having kids, or buying your first property. But a lot of people don’t adjust their insurance or investments to match these big milestones. That’s when problems can happen.
I know someone who didn’t review his insurance after buying his first home. One day, he realised—if something happened to him, his family would struggle to pay the mortgage. That realisation made him wake up and thankfully, he caught it in time.
What you can do: Stay on top of reviews and planning.
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Review your plans regularly. At least once a year, sit down and ask yourself: “Are my insurance and investments still relevant to my goals?” If not, adjust.
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Make sure you’re covered:
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Life insurance to protect your family.
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Health insurance because medical costs in Singapore are no joke.
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Critical illness and disability insurance to cover income loss if anything unexpected happens.
But don’t just buy because someone recommends it. Make sure it suits your goals, and talk to a professional if you’re unsure.
Turning Mistakes into Lessons
Look, mistakes will happen. Nobody’s perfect, and managing wealth is a learning process. The key is to see these missteps as lessons and not let them hold you back.
Here’s how to turn things around:
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Seek expert advice. Don’t feel paiseh (embarrassed) to ask for help. A licensed financial advisor can guide you through the complexities of wealth management.
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Keep learning. Take time to improve your financial literacy. Read articles, attend workshops, or even just follow market news. The more you know, the better decisions you’ll make.
Final Thoughts
At the end of the day, managing wealth isn’t just about having more money—it’s about making smart choices so your money works harder for you. You’ve already done the hard part by earning it. Now it’s about protecting it, growing it, and making sure it gives you and your loved ones a secure future.
Take it step by step, avoid these common mistakes, and don’t be afraid to ask for help when you need it. You’re on the right track, and I’m confident you’ll get to where you want to be.
Keep going—you’ve got this.