Young and Unfazed ....

I just had to share my thoughts some after reading in today's Straits Times about the YOUNG & UNFAZED. Some rather alarming things in that report. Let me share that with you.

• Of 507 people who went to Credit Counselling Singapore (CCS) for help, 18% were under-30s (it was 8% in 2006)


• Main reason for seeking help at CCS was due to overspending - average amount owned by each young adult was $55,000 to seven creditors


• In the first four months of 2008, 12% who declared bankrupcy was people aged 30 and below


• Many are not too perturbed by the bleak economic outlook and pretty confident that they will be able to hold on to their jobs, expecting to earn as much as their seniors (who graduated when the economy was doing better)

The article also featured a 20 year-old undergraduate from NTU. She has no worries about the recession. She carries a $2k LV handbag to school, latest mobile phone and goes on overseas vacations where shopping can be around $1k. Honestly, I think if she can afford all these things then good on her. I have no problem with LV bags or shopping vacations. What I was taken aback by was when she shared that she has never run out of cash as her parents give her money whenever she asks. Lucky girl to have parents (Mom is a private tutor and Dad a businessman) who will meet her ever whim and fancy. Are the parents teaching her the right values when it comes to money? She has dreams, that when she gets her first pay check, she aims to buy a Chanel bag which costs $4000. Damn, I want that kind of job that will pay a fresh graduate $4k!

This person is not the norm of all the young adults out there because I remember reading an article about a young adult who gave up luxuries in life so that she can watch her savings grow. Very admirable for a young adult.

I wonder when it comes to money management skills, are we doing enough? Who should be teaching kids this? Parents? School? I had parents who spent only what they could afford, never beyond their means. That alone should have been good enough. But I strongly believe we need to be more proactive instead of letting such skills be learnt by chance. Parents and schools need to be both responsible in teaching financial literacy and I think even at the primary school, the right values and simple skills can be integrated into what they learn in the classroom. Parents too need to be involved and not simply just give ther kids money for anything and everything.

Also included in today's article are tips from the experts:

• Put at least six months' worth of monthly expenses as reserves in case of retrenchment


• Sign up for as many credit lines as possible while earning an income. If retrenched or if your business fails, you will still have some credit to fall back on. Banks will not extend credit to those without an income. Interest on credit lines is charged only when the money is taken out.

The first tip I have heard about and I agree that it's important to have reserves in case of retrenchment or any circumstances that may lead you to be unemployed (for example, illness etc). However, I am a little uncomfortable with the second tip. It's fine if you are one of those super disciplined person and will not be tempted to touch the money thinking that you can afford to pay it as you have a job. But if you are not that disciplined, I believe this could be disastrous. So know yourself well before following such advices because YOU are the one who the banks will be going after to settle the credit owed, not the experts ya.