Undeniably, there are important life decisions that could affect you financially. In fact, most life decisions will affect us financially in one way or another.
Thus, for this blog post, I would like to share my view on important life decisions that could affect you financially. Of the many life decisions, I only picked the top 5.
Basically, this sharing is based on my personal experience. Apart from that, observing and learning from others also affected my views.
1. The academic course you took and the college you attended
Firstly, choosing the right course and the right college is one of the earliest important life decisions that could affect us financially. But, I guess not many of us are aware of it.
Perhaps, it was because, at that time, our age is around 18 or 19 years old. Still considered too young to understand the impact of our college degree on our financial life.
So, how does your college degree affects you financially?
If you enrolled on the right academic course, it will definitely help you along your career path.
Thus, your career will soar faster and smother too. From there, you will gain monetary value.
In my younger years, I don’t really understand why some parents send their children to universities abroad although their children can attend the same degree at local colleges in Malaysia at a much lower cost.
Later on, I understand that it is the exposure to the outside world that plays an important role in later years
Later on, I understand that it is exposure to the outside world that plays an important role in later years.
For the above, I am not saying that the quality of education in Malaysia is not on par with universities abroad.
In fact, some of our local universities are of great quality.
But, what I am trying to say is one should go to other places to experience the life and the culture there.
Because all this exposure will greatly affect how a person thinks, plan and act for the rest of his or her life.
So, like it or not, the academic course and the college we choose do really impact us financially.
Thus, choose your tertiary education path wisely.
2. Your home purchases
Secondly, your home purchases could also affect you financially.
For many of us, buying a house is one of the biggest financial decisions in our lifetime.
Because it can be the most expensive purchase with a long financial commitment.
According to Bank Negara Malaysia (BNM)’s Financial Stability and Payment Systems Report 2017 (PDF), which was released on 28 March 2018, loans for purchases of residential properties represent 52% of total household debts in Malaysia.
This shows that your decision for your home purchase really does affect you financially.
Due to this, one must analyze thoroughly and think carefully before deciding on a home purchase. Do take note of all the important considerations when buying a house.
Without proper planning, your home purchases could bring financial disaster when you are not able to serve the monthly instalments
Without proper planning, your home purchases could bring financial disaster when you are not able to serve the monthly instalments.
On the opposite side, if you have done your homework well before deciding on a home purchase, your home purchases could be one of the best investments in your life.
Because, over the long run, owning a property is one of the proven methods to increase a person’s net worth.
So, it is important to decide on an affordable home purchase.
3. Your life partner
Thirdly, the person you married to could also greatly affect you financially.
If your life partner is a spendthrift, she can easily overspend and fall into heavy debt.
Or worse, she falls into bankruptcy. If this happened, it definitely will affect you too.
On the other hand, if your life partner is someone who practices prudent spending, she will make your financial life much smoother.
On top of that, she will be able to work together to achieve your financial goals faster.
A change in marital status also could greatly affect a couple’s financial matter
Other than that, a change in marital status also could greatly affect a couple’s financial matters.
Even though no one goes into marriage with the thought of divorce in the head, sadly Malaymail reported that one divorce in Malaysia every 10 minutes.
Undeniably, a divorce can be very expensive. For instance, it could involve expensive legal fees and high alimony or maintenance fees.
Furthermore, a divorce can be even more expensive if child custody is involved.
Perhaps that’s why many modern couples are now signing up for a prenuptial agreement before tying the knots.
As for me and my husband, both of us are not big spenders. We both take money matters carefully.
Even though there are some differences in our investment style, most of the time, we are still able to manage it. Of course, there is still room for improvement.
Undoubtedly, our life partner plays a major role in all your financial decisions.
So, it is wise to choose your life partner carefully.
On a side note, you might be interested to read my sharing on 5 secrets for a financially happy marriage.
4. How many children do you have
As I shared in one of my posts earlier, the cost to have a baby in Malaysia can be quite expensive.
Furthermore, what I shared is only up to the baby is 1 month old. Certainly, the cost to bring up a child in Malaysia can be even higher.
Meanwhile, an article on The Star Online quoted personal financial management coach Yap Ming Hui as estimating the cost of upbringing a child to be as much as RM1.5mil in urban areas such as Klang Valley.
While the cost can be around RM110,000 in a rural area such as Kuala Terengganu. That article was dated 14 June 2015.
Additionally, he advised that it will be wiser for Malaysian couples to think twice if they plan to have more children.
As the more children you have, the fewer savings you will have left for your old age
As the more children you have, the fewer savings you will have left for your old age.
If given a choice, I believe many couples in Malaysia wish to have more children. But due to the rising cost of living, more and more couples are comfortable with just one or two children.
Furthermore, having a child is a lifelong decision.
Of course, the more children you have, the bigger your financial responsibilities. As parents, we always want the best for our children. That is why having children can be costly.
Personally for me, currently my husband and I are blessed with a child (after many years of expensive infertility treatment).
But, one thing is for sure, your decision on how many children you have will definitely affect you financially.
Read more: Tips To Save Cost on Having A Baby in Malaysia
5. Your insurance coverage
Lastly, your decisions on insurance coverage could also affect you financially.
Nowadays, I would say it is expensive not to have insurance coverage, especially medical cards.
Because a light injury treatment could easily cost up to thousands. Not to mention serious medical condition which requires long-term medical care.
Similarly, having sufficient life insurance coverage is of the utmost importance if you are the breadwinner of the family.
Sufficient life insurance coverage offers a way for your family to continue living comfortably and without financial worries. Even if something unfortunate happens to you.
Personally for me, having insurance coverage means that in case something happens to me, I hope that there is no need for me to fork some money out from my savings.
I know and I acknowledged that anything related to health can be very costly
Because I know and I acknowledged that anything related to health can be very costly.
Surprisingly, some employees prefer to fully depend on the insurance coverage provided by their employers.
Perhaps they want to save on insurance premiums.
But, they are taking a high risk here because the coverage stops if they are no longer employed with that employer.
By the time they lost their employment, perhaps age has caught up and so does the insurance premium.
Also, it is wise to take note one should not simply switch the medical insurance plan without proper consideration. There are important things and factors to consider.
Thus, having the right and sufficient insurance coverage is among the important life decisions that could affect you financially.
Read more: 5 reasons why I signed up for Prudential PRUlink assurance plan
Final thoughts
Basically, I believe these are 5 important life decisions that could affect you financially.
Surely, there can be more than these, such as investment decisions, preferred lifestyle and career path.
But, I believe these 5 decisions are the basic decisions that greatly affect us financially.
Feel free to drop your comments below.
Or perhaps share with me how these life decisions have affected you financially.
Read more: How standing instruction benefits my investment
photo credit: Gustavo La Rotta Amaya La Luca via photopin (license)
