Here are 8 habits which you didn't know that would impact your retirement plans.
1) Uber / Grab
It's so easy these days to call an Uber/Grab.
Taxi's are so yesterday. They are also more expensive with grumpy drivers.
Introducing Uber/Grab. These ride sharing apps are usually used by the younger crowd and similarly younger drivers. You input your credit card details in the app, and Uber/Grab gives promos to incentivize you to make it a habit to ride. If you get your days and promos right, the ride could even be free. Cool right? But this easily becomes a money draining habit if you aren't careful. Since people are now so used to having the app and using it for promos, what do people do when they need a cab but there's no promo code? Well, they just call an Uber. It's cheaper than conventional taxis. It's convenient. The ride comes, I get in, the driver brings me to whatever destination, and I get off. I don't need to take out my credit card or cash or whatever. This gives the illusion that it's "free". How many people really check line by line what is in their credit card statements?
2) Starbucks or your regular coffee joint
Starbucks is convenient as well. It's found everywhere. That's also the point. It's so easy to find it. It's comfortable in hot Singapore with air conditioning. Worst of all, it becomes a habit. You see, once things become a habit, they become almost invisible in your life. So you get off the train or you get out of your car, you drop by the Starbucks on your way to office. The barista knows what you usually order and you hardly need to say a word and you get your coffee and make your way to office, or you drink it at the outlet. All these make you come back. The convenience of the Starbucks being located at the right place. The barista knowing your name makes you feel at "home" or a comfortable place so you tend to come back. After lunch, it happens again. You drop by the Starbucks to get your caffine fix before you start work again. The cheapest coffee in Starbucks is SGD3.70. This is the today's brew. The usual lattes cost something like SGD5 and above. That's equal to the cost of a meal at the hawker center or food court.
Of course this is on the list. I don't smoke. But there are a number of people who do.
Cigarettes are now what? SGD9 per pack of 10 sticks? Something like that I think.
Why don't you just take a ten dollar bill out every day and burn that. It's healthier for you and it saves you more money in the long term. Cos you probably are going to pay a lot more for insurance policies and medical bills in the later years of your life.
Do I even need to elaborate on this point?
Even smokers know that it wastes money and is bad for their health. See why I keep talking about habits. They are hard to break.
4) Eating out expensively
Ever since I moved out to my own place, it's so easy to just feel like eating something nice. Previously, my mother cooked so we just went home everyday without thinking to eat. Now, I usually cook some nice healthy food, low salt, no MSG, less oil food. Every once in a while, we would decide to eat out, cos my cooking is kinda bland (intentionally). So after I pick up my wife, we discuss what to eat. This could range between restaurants, jap food, steak, hawker, food court, fast food, etc. We initially ate at restaurants. Then I realized, before it became a habit, how easy it is to just keep eating nice food at a comfortable location. After a few times, we decided that this was not the way to go. We fixed our meals at hawkers centers, food courts, maybe fast food on weekdays and special food only on weekends. We realized that cos we were living by ourselves, it was so easy to just go out and eat anything, and why eat at hawker centers when you can eat at air conditioned outlets serving premium food. So the cost of our premium food was SGD20 per pax, and after the change to simplier fare, we spend SGD5 per pax at hawker centers or SGD7+ at fast food outlets.
This is not the same as the above.
With Monopoly game, people now may give themselves the excuse that they might as well eat at Macs, since they are going to eat anyway right? Might as well have a chance at winning that car. I know people who eat it 3 times a week. It's convenient. You can call delivery. Not much mess, you just eat and throw away the rubbish. And best of all, you can win a car, or gold or a cruise. Well... same point. Once it becomes a habit, you won't notice where all the money is going. The Monopoly game is for what? 2 months or so? That's just the amount of time needed to create a habit. So maybe you might be eating Macs on weekends regularly now cos it's convenient and fun. Or you might decide to drop by the Macs on the way home since you gotta eat anyway right. Guess what happens in January when the promotion is over? Your body will get used to the flavours and crave for it. You may now WANT to go to Macs more regularly than before the promotion.
6) Comparing with others
Come on. I've discussed this yesterday. You friend buys an LV bag, you buy a Celine bag to out do her. Hell, she think's you're dumb cos she bought a fake one for SGD50. She was just doing it to make you spend money to see you broke every month. Then she goes to posh jappy restaurants and posts nice pictures on Facebook and you wonder how is she able to buy the LV bag AND still go to cool places to eat and you admire someone like her. No. Really. I know people who buy fake stuff and laugh at people buying real stuff. Or your colleague buys a BMW and challenges you to buy something similar. So you go and get a Mercedes, then you realize that was his rich uncle's BMW which he borrowed when the uncle was overseas. Seriously, stop comparing with the people around you. You'll be happier and more often than not, richer as well.
“The only time you look in your neighbor's bowl is to make sure that they have enough. You don't look in your neighbor's bowl to see if you have as much as them.” - Louis C.K.
7) Having expensive hobbies
Now hobbies are always fun. And everyone should have some hobbies. But there are some hobbies that are ridiculously expensive with little or no return. Open sea fishing might be one of them. I'm not too familiar with the costs of fishing, but considering a more hardcore fisher might buy fishing gear up into the thousands of dollars and go on fishing trips of SGD500 or more, it makes me wonder why people would want to spend that kind of money. Sure it's not for the fish but the fun of fishing. But seriously? A few thousands might be kinda on the steep side. I doubt they would be going on fishing trips every week right? So I would think that a hobby which could be done more regularly would be more fun.
Collecting watches is considered an expensive hobby but some people have made money out of it so I'll not say anything about that.
Being interested in new technology. I know people who like the fun of having the latest gadgets. Like really, they just love to have it just for the fun of it. The new Mac laptop, the new iPhone, they even have solar panels which they can plug a USB connector to charge their phones on solar energy. Then they get funky new keyboards, and gaming mouse. The whole works. You do realize that technology is changing very fast right? These things would be obsolete in like a year or so. Then you'll have to buy new stuff. But then again, I suppose that's the fun of it. The good excuse that your existing item is now old and needs replacement. It's a good way to tell yourself that you need to buy a new one.
8) Sending your kids to the latest classes
Ok I'm not a parent. I know many parents who send their kids to the latest enrichment classes. I understand the logic behind it. Parents I've spoken with tell me this, "Look I don't want a time in the future IF my kid is unsuccessful, and I think back and wonder if I could have done more to have changed his outcome. I would rather send him to all these classes now, since I can afford it, so that in future, if he is successful or not, I will know that I have done my best in providing the foundation for him."
Ok so I understand the logic behind it. And yet, my other readings tell me that IF I have kids, I don't need to do all these.
Like, if you put a gifted kid in an average class, the gifted kid just... well... becomes average.
Or, if you put an average kid in a gifted class, the kid will become above average. The kid might perform worse than all the gifted kids, but the kid will still be better off than the other average kids.
So the enviroment of the kid is very important (it's just as important for adults as well). So, likely, I'll focus on getting my kid into the right school. I'll also teach my kid skills, like financial planning, cycling, swimming. He will learn to count, read and write in due course. But most importantly, I feel, if I ever have a kid, is that I will let him play. Many articles on the importance of playing, here and here.
And you know what upsets me a lot. Is when I see adults teaching children how to play.
So there you have it, 8 habits which will hinder your retirement plans.
Don't think they add up to much? Then read my previous post on it all adds up.
If you can think of stuff which create unexpected expenses leave your comments below.