Sunday 25 February 2024

How I budget when I was a fresh grad versus how I budget now as a working adult

 Budgeting is a huge part to managing your finances. Making a suitable budget and sticking to it can make your financial journey easier and accelerate achieving your financial goals.

It might not be easy at first and you might make some slight adjustments but once you have a budget that you can work with, in the long term, the results will be visible. Making a budget as a fresh graduate from university is definitely different after working for 4 years as you would probably see your income grow and inevitably, there might be some lifestyle inflation.

My budget from 4 years ago is definitely different from now and mainly because of income and current expenses. But if we were to see it as percentage terms, there really isn’t any huge change in percentage but definitely changes in absolute number terms. So let me share on how I budgeted.

Budget as a fresh graduate

Graduating and getting a job was nice, I felt like I was ready for the adult world and all ready to carve out my own journey. But when I first started, my starting salary was $2700 gross so after CPF deduction I took about $2160. This was not much to work with especially after giving allowance to my mum and paying the bills. Also, since I just started full-time work, building up an emergency fund was my first priority instead of investing.

A larger proportion went to my savings as a fresh graduate and I also had to find ways to reduce my expenditure to be able to save more. Fortunately, most of your peers would have also just started working so the expenditure of all of you would be roughly the same and so my friends mostly met at affordable options.

Below is a rough graph on how my budget was as a fresh graduate after I have build up my emergency funds of about 4 months:

 
As a fresh graduate, there might be expenses where you are tempted to spend for example an expensive outfit or branded bag or wallet but know what is a need and a want is the most important thing. I also don’t think there is a need to manage and scrutinise every expenditure but don’t go too crazy.

Budget after 4 years of work experience

Over the past 4 years, my salary has seen some increment not huge but big enough for me to be able to put aside more for investing as well as increase my expenses slightly.

I like to go for good meals with my family in the weekends and travel a little more frequently compared to the past. Beside being able to classify these as experiences, I believe it is good to spend some money to let my mum enjoy herself although I don’t pay for her travel expenses but help by giving her an allowance monthly and pay for meals when we eat out.

Budgeting has changed quite a bit but in terms of percentages, it has not deviated much. Here is my current budget allocation, you can see that I am still saving although lesser, I do have my emergency funds build up already and set aside but I am still putting aside money every month, this savings that I am setting aside monthly is for big ticket items like insurance payments, travel expenses and bills. I don’t track my expenses but just ensure that I have sufficient liquid cash savings in my ‘savings’ account which is actually a spending account, the account holding my emergency funds is never touched. Whatever is left in the ‘savings account’ will just be left there or if the amount grows big then it will be re-allocated.

I didn’t hugely increase my allowance to my parents so that is why other areas are seeing an increase for example investments and expenses. Of course, it depends if you would like to increase the budget for your parents and it differs for every individual.

Current Budget:

Plan and work with what fits you best

Everyone is different and the circumstances are not the same so there is no one size fits all budget but instead you need to plan and find what best fits you. Also, in the first few years of working is when you can maximise your savings and investment rate as you have lesser big ticket items.

You will be able to survive on lesser too as you have just graduated from school and shouldn’t have that big of an expenses. Some of us might have study loans to repay and so remember to budget that in as well.

As mentioned in a previous post I did, where I mentioned that your investments are not going to grow linearly so in the early years, building up will seem tough as the compounding is not huge due to the capital amount but keep at it and you will see the difference in the long run.

It is a good first step to managing your finances and having the habit of budgeting makes sure that every dollar is accounted for. As your income grows, your budget might change but you would have had a good habit via your budget allocation hence setting you up for success in achieving your long term goals.

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Sunday 18 February 2024

How my investments in 2024 will go | Plan for 2024, am I still holding onto TSLA?

The first month of 2024 has just passed and already my portfolio is facing some downward pressure. If you are not aware, I do have a substantial percentage of my portfolio in Tesla, with the recent months of adding QQQ, the percentage has gone down but it is still about 30% of my whole portfolio which can have huge impacts considering it’s share price after the recent Q4 2023 results.

The share price has fallen below $200 and we do see some selling pressure as the outlook for 2024 seems rather dull judging by what was said and in the AI innovation portion, Elon Musk was rather negative on the innovation especially when it was related to the Dojo supercomputer as he mentioned that a hedge would be to get Nvidia’s GPUs. So how then am I investing in 2024 and am I letting go of all my Tesla shares?

Hold or let it go

It really goes back to why I invested in Tesla in the first place, I can justify that they still have a lot to achieve and have the potential for huge growth ahead but we can see some obstacles ahead as we do not see the exponential growth that was set originally. Additionally, Elon Musk seems to be facing various pain points in gaining the majority stake in the company which will allow him to do what he wants or think is the best for the company.

Although Tesla is an innovative company but it now has grown to a substantial size and with great power comes great responsibility so it seems tough for Elon to have control over how he hopes to navigate or organise the company. It also seems like Elon has a lot of haters although there are many who also stand by Tesla. I still am holding to my Tesla shares and will be seeing how it goes.

What am I doing while holding

I am adding QQQ as this AI growth has benefited numerous companies and some of the magnificent 7 has seen good growth and opportunities like Meta and Microsoft and of course Nvidia. I am now more into index investing while doing covered calls, so no individual stocks as I have mentioned previously. No plans to trim any of my individual stocks at the moment.

Things are not fixed, action as we go along

With all that being said, all plans are not fixed and it might changes as things happen considering the markets and economy is really volatile. Everyday, we are hearing of layoffs as companies stay lean and slowly incorporate AI into their work streams.

I can also see it in my company as we are a technology company though not part of the big tech but it is still going through some changes as we adapt and accept that AI will be taking over some of the mundane and repetitive work.

The price action for Tesla shares have been in a rout as we do see negative outlook on it as interest rate remains high, comparing Tesla with Nvidia, Microsoft and Amazon, it is rather painful. Some times, I do wish that it has been allocated to maybe Nvidia so the growth recently would have been exponential.

I do see how Tesla can grow in time to come but short term, it looks really tough for it to break out especially since the automobile sector is what it is in focus for now, there are many other energy sectors that Tesla is developing but for now, it seems tough with profit and growth not as predicted and share prices being compressed.

We shall look back again at the end of Q1, Q2, Q3 and 2024 to see how it all goes, in the meantime, QQQ is my building block.

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