In this video, I’ll share 6 money habits that are keeping you poor. Enjoy!
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0:00 – Intro
1:17 – Living yolo. Not having a long term goal
Some people like to live YOLO, claiming that they might die anytime. But the truth is there’s much higher chance of living than dying when you are young. A study showed that elderlies in Singapore need about $1400 a month to survive. If inflation is accounted for, you would about $742k for retirement 40 years later. So start planning for the future so that you can have a better retirement.
3:17 – Buying to impress
We like to buy nice clothes and nice shoes just to impress people. But all I see are just a walking billboard. People who are actually super rich try their best not to look rich while the not so rich are trying their best to look rich, perhaps its to compensate for something which they don’t have. Stop buying to impress because your future self won’t be impressed by the present you.
4:25 – Paying yourself last
Whenever some people receive their pay, they will start paying everyone else first and pay themselves any remaining money. A research found that many Singaporeans finance were affected due to the pandemic. It is always during these times that you will regret spending money needlessly in the past.
If you want to become rich, you will need to pay yourself first. Every month, put aside an amount, it could be 10% or even 20%. Put it somewhere where you could earn a good interest and where you couldn’t access it easily.
6:52 – Think it’s too early to start investing
According to a survey by OCBC, it was found that 1 in 3 Singaporeans do not invest. By not investing you will only have 1 source of income, which is your day job, and that’s why you will never become rich. There are few benefits to start investing early. First, you will have time to take risks when you are young vs when you are older and have responsibilities. Second, you will have time to handle market volatility. Third, you will enjoy the power of compounding.
9:28 – Lack of budgeting
When you don’t have a budget, you won’t be able to keep track of your spending. By budgeting, you will make sure that you are not spending the money that you don’t have. It will also help you to plan your long term goals and work towards them.
There’s a 50 30 20 rule, where you set aside 50% of your money for needs, 20% for savings, and only spend the remaining 30% on wants.
10:39 – Spending more as income increases
You might have gotten a payraise before, and then increase your spendings accordingly, eg buy more clothes, treat friends to dinner and even upgrade to a nicer condo. That’s called lifestyle inflation. Even though Mike Tyson was rich, his spendings also increased and in the end he went bankrupt. So it’s very important that you don’t have lifestyle inflation. Instead invest the extra money or even start your own business.