You learn Foundational Financial Planning in Primary One

This is an interesting story I heard again from my children when they studied English in Primary One. It is so meaningful that I suggested everyone should recap this story.

It is called “The Ant and the Grasshopper”. Sounds familiar?

You can watch this short video here to refresh your memory.

Remember this story when you were as young as 7 to 8 years old? Well you would have long forgotten this story when you started working.

Here’s what naturally happen…

When you stop schooling and started working, got your first pay check, how do you feel? “Wow finally I can earn my income and have my ability to spend the way I like it! It’s time to enjoy life!” And a spending pattern commence. You earn and spend and enjoy life. When come to the habit of saving money, you would say this to yourself, “If I can save then I will try to save some money at the end of the month. If not, it’s actually still okay cos I will have my next month’s pay check, and my year-end bonus is coming.. I can always save later. No worries!” And the spending cycle repeats.

There comes a time when you started to think of purchasing big ticket item like a car. Well no problem, you know you can get a loan through financing. You would say this, “Anyway I can always afford it as I have an income. I can always manage my debt repayment. No worries!” Then you started to shop for expensive items, go for that lavish holidays and pay them with your credit cards.

All of a sudden, the income that you always expected to have comes to a grinding halt.

This day can come in many forms – when you need to leave your current job and unable to earn back the same income as before; when you are suddenly critically ill or disabled, or when you grow old one day and have to leave the work force.

That is when winter comes. Where is your savings? How long can it last? How are you going to pay those debts?

The story tells about the virtue of planning for the winter.

During your working years, you need to plan diligently on your future. To do this, you need to do your budgeting, watch your expenses and save up and grow your savings. Build your nest egg early and let money compounding works for you. This has to be a continuous process. There has to be an urgency to plan for this, the moment you started working! It has to become a habit.

Remember rule No. 1 of foundational Financial Planning is about the ability of earning an income. This ability of earning an income is never a guaranteed thing.

It is important to understand that we need to work hard and at the same time plan for our future. Do you want to be the hungry grasshopper that ended up begging for food, when winter comes, and is refused?

A final note – winter shall eventually arrive one day, and it may come sooner than expected.

Plan well ahead for that long bitter winter.