The Most Important Financial Question

14 Sep 2017 

​By Soh Chin Heng


Mr Soh Chin Heng, or CH as he is commonly called by friends, is the Deputy Chief Executive (Services) of the Central Provident Fund Board Singapore. He oversees the Board's customer service and schemes administration, and is the Board's engagement champion. He is a non-practising certified financial planner, and gives regular talks on CPF and financial security.


Who doesn't want to be financially secure, and be able to pursue one's dreams and passions without worrying about not having enough money?


Planning for financial security is complex, and there are many questions to be answered. But which question is the most important? Is it to determine how much you'd need? To be able to pick that stock that'd deliver ten, even hundred-fold return? Or to hire the right advisor that has your interests at heart and can guide you well?

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These are important questions. However, the most important question to ask when planning for financial security is the `why' question. Why do you want to be financially secure? This question may seem like a no-brainer at first. Isn't it obvious why money, and financial security, is important? However, it is crucial to go beyond the obvious.


One's financial security journey is long. Typically, the journey starts after our studies and when we start work. Some may argue it starts from even younger. With better healthcare and rising life expectancy, we can expect to work for 40-50 years. In fact, the journey doesn't end even after we've stopped working; we would then have to consider how to manage the finances we've accumulated to last us through our remaining years, and perhaps, even to leave an inheritance to our loved ones.


Over such a long time frame, it is important to be clear about the financial goals you are striving towards. Otherwise, it becomes easy to give up mid-steam or settle for something less.


I like to pose this question to the participants at the talks I conduct, "How will your life change if you wake up and discover you have $1 million (or whatever amount you deem sufficient to be financially secure) in your bank account?"


One unforgettable response came from a lady in her twenties. Her answer, "To go to and from work by cab everyday." I initially thought she has being frivolous, until I was recently affected by the MRT breakdowns for two consecutive days. I now begin to empathise with her.


An interesting and common response was, "To invest". That made me wonder. I would have thought that you should learn to invest to get $1 million and not the other way round. Perhaps, there was a mentality that you need to have big bucks before you can invest in a serious manner.


Quite a number of participants would like to devote themselves to humanitarian or voluntary work. That is noble.


The most thought-provoking response came from Sally, a lady who has been working for an organisation – her first employer - for more than 20 years. Sally enjoys her work, and her colleagues are like her extended family. However, there are times when her bosses or customers give her a hard time.


During these moments, she felt like throwing in the towel, but couldn't because of her financial commitments. Her response to that question? She would write a resignation letter and lock it up in her drawer. While she has no real intention of resigning, she reasoned that the mere thought of her being able to do so is a great stress reliever and it would help her cope better at work. She then added – and that's a clincher – that she would actually enjoy her work better if she was financially secure, because she would then be working because she wants to and not because she needs to.​


What about you? What would be your answer to the question "Why do you want to be financially secure"? 


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