Are there moments in your life where you wish you'd made a different decision?
How could things be different if you did?
Thanks to my work, i've the opportunity to meet plenty of people, to listen to their journey and to observe.
It's interesting how one can earn $10,000 a month and have little savings in his 30s while another earns $4,000 and have much more.
It's interesting how some parent provide financial help to their children, for their housing & tuition while some are financially dependent.
Other than income, lifestyle, privileges. I realise, timing plays an important role in wealth building too. These are 4 best periods in our life where one can massively accumulate wealth
Life Phase 1 : Before your significant other
With the introduction of another person in our life, lifestyle may change and so will our expenses. In the initial phase of dating, resources will likely dilute because you may spend in ways you wouldn’t when you are on your own.
As your relationship progress, resources will start to divert as you work on shared goals like housing, marriage, vacations, the list is non exhaustive
A good percentage of your income will go towards this aspect of your life and will likely take the form of dating expense > saving for big ticket items > household running cost
Once the process of spending starts, it is unlikely to slow down or stop.
Life Phase 2 : After Settling Down
By settling down i mean after you are done spending on or saving for the big ticket items (wedding & housing). This period is usually brief, depending on one’s ideal towards family planning.
During this period, cashflow that was allocated to big ticket items can temporarily be reallocated to wealth accumulation. It will be a good time to explore instruments of shorter-term commitment to aggressively build up your wealth.
For those who choose to be married without children, they will have much more time and resources to grow their wealth.
For those who want kids, they will see their income that was being used for big ticket items going to them. The spending may look like maternity cost > childcare, milk powder & diapers > tuition & allowance.
If there isn’t thoughts being put to wealth accumulation, parents may conceive the idea of having their child take care of them in their old age. That perpetuates a sandwich generation.
In fact, if you have the resposbility to provide for your parents, this whole journey of wealth accumulation would have been 1 notch harder than your peers who don’t have to.
As an off-topic reminder, don’t compare your journey as everyone’s starting point is different
Life Phase 3 : Significant pay increment / bonus
It’s very tempting to improve our lifestyle as soon as we are able to. We get dopamine from doing so. It’s only human that we pursue short term gratification.
Personally, I believe that we should improve our lifestyle and live an exceptional life as much as we can
However, consider the following, allocate your increments or bonus to wealth accumulation first then to spending. For example, 50-50 or 70-30.
This way, you can enjoy ur life and be certain that your lifestyle can be sustained during your non-working years and perhaps, be the last sandwich generation.
Life Phase 4 : Children become independent
One is very likely to be in their late 40s or 50s at this stage of life
If you’re a parent, your children would have completed their education and started working. Your runway to accumulate may be very short depending on when you want to retire.
Fortunately, you will see a huge increase in monthly surplus and this is the last chance to catch up with the neglects and procrastination in your wealth accumulation.
Unfortunately, if one only started to plan for retirement during this phase, it is highly unlikely that he or she can retire on their own resources. Hence, this is a sprint to catch up and not a sprint to complete the entire marathon
Closing Thoughts
It’s easy to postpone and neglect our future as we prioritise our short term needs and goals.
I hope this has been a fun read, and give you a glimpse of when are the best opportunity in life to amass wealth
some will find this article less relevant. for instance,
Single or married without kids, you should be very well on track to have a comfortable retirement or early retirement as you may have more disposable income
High income earners, wealth accumulation usually isn’t the problem if started early. But that depends on your lifestyle, once certain lifestyle pattern starts, it becomes hard to stop.
Perhaps we can have another article devoted to challenges higher income earner faces
Cheers! Till the next time
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