If the latest TODAY Youth survey by is anything to go by, more young people are placing emphasis on financial independence.
FIRE is not a bad thing. But speaking from experience, younger people (through no fault of their own) tend to underestimate future expenses. So while it is admirable to aspire to FI, it is just as important to set realistic financial goals.
So which are the constantly underestimated expenses?
Healthcare
This should come as no surprise. When you are 25, good health is almost taken for granted. You look at those old fogeys with their pot bellies, chronic back and joint pains, and you think, nah, this will never be me. I am too active.
Trust me, I was there.
15 years later, you are looking at photos from your first office Christmas party, and it hits you hard: Where did that dude go?
Lamentations aside, when I was a bright-eyed graduate getting sucked into my first Investment-Linked Policy, my annual health premiums were $200+ a year; and this was with all the bells and whistles, as-charged plans, private hospitals, no co-pay, no deductibles, all that jazz.
Fast forward to present day, even after downgrading my plan to exclude private hospitals, I am paying $700+ out of pocket after deducting whatever can be paid from Medisave. It has gotten to a point where I am thinking of dropping the riders to lower my premiums.
If you thought that was bad, wait until you hear about my parents' (aged >65) insurance costs. I am paying (out of pocket cash after Medisave) around $2,200 per year per parent. Again, this is not even for the top tier plan.
So a note to the younger parents today, while our parents' generation did not always have the luxury or knowledge to plan for their future retirement and healthcare, you should definitely do so to avoid becoming a burden to your children. Let our generation be the last so-called sandwich generation.
TLDR version is: Hospitalization insurance is essential. Premiums go up exponentially as you age. At the very least, make sure your FI income can grow in tandem.
Children
I know what you are thinking. I don't want kids anyway. Some change this view as they go past 30/35. Others, like me, continue to think of children as an optionality.
But FI is all about planning for optionality. Life is not a constant. Your spouse may later change his/her mind. You may one day look at the happy family portrait of your childhood friend and think perhaps it is not all bad.
The question here is: If and when you decide to have kids, can you afford them?
The cost of raising children is a contentious (and clearly subjective) issue. Depending on who you ask, the total cost of raising a single kid to adulthood may be anything from 150 - 300K. As a ballpark guide, it is always useful if you and your spouse can ringfence around 1.5-2k/ month as a "kid buffer". If you end up having no kids, this amount can always get reinvested to build more passive. But if you do end up having a kid, this buffer would prove invaluable. The key here is flexibility.
Lifestyle
When I was younger, I would have been perfectly content with spending 8-10 hours a day on my Xbox slaying dragons on Skyrim or binge-watching Netflix while ordering cheap take-outs.
Yet, should one really go through life basically re-living the same day for 40-50 years?
Perhaps with age comes morbidity. But these days, I constantly find myself wondering, on my death bed, what would I regret most?
Of course, this is not a call for one to YOLO with abandonment. But without experiences, life is just too white a sheet, too bland a porridge, too dull a story.
As you grow older, you want your life to read more like poetry and less like a diary.
Certainly, experiences which are deemed valuable differ from person to person. Be it seeing new places, eating new food, trying new sports, playing new games, learning a new language, driving a convertible, etc. Possibilities are endless. What is common however is that, most if not all of these things, will cost money.
When you are working 10 hours a day, 5/6 days a week, you naturally have no time to think about these things. However, after reaching FIRE, and the novelty of not working wears off, you WILL return to a baseline of happiness. Once that happens, you will inevitably be looking for things to fill the void.
It comes back to the theme of optionality.
If and when you want to [insert that thing/holiday you always wanted], can you afford it?
Discouraged? Don't be. Just take it as well-meaning and practical advice from a fellow FIRE aspirant who has been at it for the last decade or so.
There is nothing more demoralizing than finally reaching a financial goal set ages ago, only to realize that you have grossly under-planned.
Onward to FI friends.
Healthcare is easy if you have "MONEY" buy a hospital plan and keep the rider, maintain a balance health-style eat well exercise enough....if it is time to go it is time. Children is our future, if we don't see any bright future ahead, then it is up to you. It is never expensive to raise a child in SG but you need more "TIME" to be with them, I say otherwise if you have more than 2....Lifestyle during pandemic times is rather heng. now we have more reason to prevent ourselves from doing things we want....still continue to maintain the bucket-list, when it is "feel right" to do them do them. Don't wait for 100%, have "FAITH".
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