When Heartland Boy first heard about Adulting last year, he immediately associated it with adultery or promiscuity. Apparently, Adulting is a verb derived from the noun “Adult”. Pretty much like how google was a noun before it became more commonly used as a verb. It first gained traction amongst millennials in the States before it started spreading globally. Since Heartland Boy was clueless about Adulting, he did what millennials would do- googled it! Much to his amusement, he realised that he could not be further away from the truth! So what exactly is the meaning of Adulting? According to American Speech, a linguistics journal, Adulting is defined as “to make someone behave like an adult or to engage in activities associated with adulthood”.
Adulting Came Early For Heartland Boy
With the correct definition in his head, Heartland Boy realised with hindsight that he was introduced into adulthood at an early stage of his life. Because of his family’s economic and social circumstances, Heartland Boy became a latch-key kid from the age of 10 as his parents struggled with 80-hour weekly work shifts. In a bid to lighten his mum’s load, Heartland Boy began to iron his own uniform and wash his own shoes. Besides helping out in the household, he started to earn his own allowance by giving tuition or waiting at tables. Essentially, Heartland Boy was introduced to adult responsibilities very early on and it certainly did him a world of good. Those lessons learnt early in his life have taught him how to adult better. As a young millennial himself, Heartland Boy is in a good position to understand what Adulting means for millennials in Singapore. Here are some milestones of adulthood and how better financial literacy and actionable plans can help to navigate the challenges!
Receiving Your First Pay Cheque
Over the last few years, Heartland Boy met plenty of fresh graduates who were absolutely ecstatic when they received their first pay cheques. Such a reaction is totally understandable since this is probably the first time they have earned such a huge amount of money. Likewise, it would be entirely liberating to splurge their first salaries on that branded handbag or wallet that was previously out of their financial reach. However, that would not be financially prudent and could even border on being impulsive.
Before receiving your first pay cheque, it is actually important to budget. Unfortunately, personal finance budgeting is hardly taught in schools. A good rule of thumb is to adopt the 50/20/30 rule. This rule recommends that 50% of your income should be set aside for essential expenses, 20% for financial priorities, and 30% for lifestyle choices.
The advantage of budgeting is that it allows one to balance out his or her You-Only-Live-Once (‘YOLO’) needs with long term financial goals. With 30% of your income catered for lifestyle choices, you could budget for avocado toasts at your favourite cafe without feeling guilty of over-indulgence. In order to better achieve your financial priorities, it will be helpful to automate your savings. For instance, instruct your bank to automatically transfer at least 20% of your monthly income into a separate savings account. In this way, you will be able to build up an emergency fund that provides for 6 months of expenses in a systematic and disciplined manner.
Once Heartland Boy was done with his budgeting, he immediately shopped around for a bank savings account that offered him the highest interest rate based on his current lifestyle.
Contributing Financially To Your Family
Now that you have received your first pay cheque, you may be viewed as a full-fledged adult by your parents, whether you like it or not. What this implies is that your parents would now expect you to pay for your own expenses such as handphone bill as well as leisure activities. Another possible adult responsibility is that parents may expect the child to contribute financially to the household. It could be in the form of a small stipend that will supplement their existing retirement savings. Heartland Boy’s principle on this is to contribute within your means and conscience.
Actually, Heartland Boy is in a worse situation. His parents are not simply looking at the children’s contribution as a supplement; they do depend on them for their retirement. That is the bleak outlook that his parents face since they have negligible savings in their CPF and bank accounts. Retirement is a phase of life that they can ill afford to entertain. Applying the strictest sense of legal or tax jurisdiction, it seems like Heartland Boy has no dependents. However, he knows that his parents would eventually depend on him and his siblings as their main sources of income for retirement.
As such, Heartland Boy is a strong advocate of insurance. He understands that it will be irresponsible of him to suddenly leave the world without leaving an inheritance for his parents. Therefore, one of his considerations is to ensure that the death benefits from his policies are sufficient to cover the expenses of his parents till they reach the average life expectancy. He also ensures that he has an Integrated Shield Plan in place to take care of his own hospitalisation needs. Along the same vein, Heartland Boy’s siblings also purchased some form of medical insurance for the folks that would take care of their healthcare needs. The last thing the household needs is to worry over hospitalisation bills.
Being a financially responsible adult means that the needs of the family, besides personal responsibilities, are also considered when planning for the future. This is where Heartland Boy appreciates the advice of his insurance agent. He has been able to highlight areas which might have potentially been overlooked. Therefore, it is equally important for a young adult to spend time to shop around for a qualified and competent insurance agent.
Buying Your First Home
Owning your own property is probably the most visible stage of Adulting. Young couples naturally get excited when they talk about their dream marital house. When love and emotions are involved, it becomes more difficult to separate the needs from the wants. Therefore, in their desires to satisfy their partner’s wishes, it is hardly surprising to find young adults commit to a property that they could not afford. When that happens, these young adults land themselves in a situation whereby they cannot afford to stay unemployed for a prolonged period. They are only a few pay cheques away from defaulting on their home mortgage. This is quite heart-wrenching especially if one had been financially responsible in the past. Therefore, a good affordability test would be the 3-3-5 test recommended by Property Soul.
It is for this reason that Heartland Boy chose to buy a HDB instead of an Executive Condominum or a full-fledged private property. A HDB was what he and Heartland Girl could afford at this stage of their lives. As property is a big-ticket purchase, one wrong move can potentially set you on a path of financial ruin.
Adulting Hits Millennials Fast And Hard
Unfortunately, the bitter truth is that Adulting is hard. It is probably even harder if a young adult is not well prepared. From getting your first pay cheque to owning your first property, adulthood indeed represents a whole new level of responsibilities. With good planning and sound financial advice, these financial commitments can actually be handled well. Articles on various milestones that encompass the Adulting journey are scattered throughout this blog. Hopefully, you will be able to navigate the Adulting journey better.
For bite-sized money management tips, millennials may refer to CPF’s Instagram account!
Before the 1950s when society was much poorer, many had to become “adults” at much younger age e.g. 14 to 16 — dropping out of school to get full-time job & earn money for family. In fact in the old days, many parents *expected* their kids to do so — many didn’t appreciate what further education could bring.
So maybe a phenomenon where “adulting” starts at later & later age may indicate that society has become so rich that people can “relak” for longer before worrying about survival. 🙂
I remember my first real job back in the early 1990s after graduation — simply accumulate salary in Post Office Savings Bank after giving about 1/4 take-home to parents. Those days people are simple lah. Haha!
Unless you have benefit & guidance of parents or close relatives in high finance or rich businesses.
And during my time, almost all my classmates in Sec and JC will be working during school vacations. This was the norm. So those not working were the exception! Some need to continue part-time work during school semesters as they need money. There are some of us who started working even during Pri school, maybe at 10-11 yrs old. I think fast food in those days had a minimum age limit of 12 or 13.
I only took my first leave and vacation after working 16 months. These days I hear of some people taking holidays after just barely 3 months into a new job (and these are elite govt scholars too). Many of them have already been to holidays in US, Europe, Japan, Australia etc etc since 5-6 years old, and they treat going on holidays as necessary as having meals. Hahaha
Yes, these are the stories told by my parents too. I admit those times were more demanding! Thanks for sharing your side of the story. I am sure it will benefit the younger generations!