However, due to a longer life expectancy – the average Singaporean is expected to live up to 78.8 and 83.3 years for men and women respectively – you want to be careful not to fall into financial distress, especially when you’re much older and are facing retirement.

Remember: You are only young once, and time cannot be bought back. With youth on your side, leverage on the power of compound interest before it’s too late.

See also: A guide to investing for women.

1. Not looking for a better savings account

If you are still using the savings account you opened as a child, now’s the time to start shopping for a new account.

Why? Your old account simply isn’t working hard enough for you.

Before the recent variety of savings accounts that offer relatively competitive interest rates, you only receive about 0.05% per annum (per $10,000) for a regular DBS Savings account. Compare this to up to 3.8% on the DBS Multiplier Account, for instance. To enjoy these interest rates, you need to fulfil certain conditions, including crediting your salary into this account, and spending a monthly minimum sum on your linked credit card.

The longer you wait to make the switch, the more you lose out on, due to compound interest.

Now, what is compound interest? The interest derived from your account is credited monthly, quarterly, or annually; the percentage is calculated against your principal sum. Each time your interest rate is credited, it will be added to the principal sum.

For instance, if you have $25,000 in your DBS Multiplier Account, and draw a salary of, for example, $3,000, you get 1.85% (or $462.50) in interest per annum.

The following year, if all remains the same, you will receive a higher interest of $471.05. This is because your principal sum is now $25,462.50.

See also: Why your savings account is not enough to achieve your financial goals.

2. Accumulating credit card debt

When it comes to owning a credit card, you have to be an adult about it. That is, never opt to pay only the minimum amount on your monthly statement. If you aren’t careful, the interest may quickly snowball, and you could be crushed under the avalanche of debt.

3. Not maximising credit card perks

Credit cards are portrayed as big, bad, and scary, especially when your debt spirals out of control. However, when properly managed, credit cards afford you more benefits than your debit card, or GIRO bank transfer.

When applying for one, find a card that caters to your needs best. If you travel often, get a card that gives you airline miles for every dollar you spend. Shop more? Get one that awards you points for every purchase.

Also, take note of the credit limit you receive – standard card companies offer you around two times your monthly income. If you are afraid of overspending, you can adjust the limit to an amount you are more comfortable with.

4. Not learning how to invest early

Beyond the obvious benefit of growing your wealth exponentially over a longer period of time, investing early helps you understand the importance of budgeting and saving.

You have a fixed sum of money for additional expenses, which you can choose to invest, shop, or spend it elsewhere.

Investing earlier in life will not only provide you with a larger sum by the time you reach your retirement age, it also means you put in less money compared to your peers who began later. This is due to the principle of compounding interest.

See how to invest in your 30s here.

5. Having bad spending habits

Common bad habits include not budgeting for your expenses, or setting aside a fixed sum of money to spend on extras.

Besides, all those drinks over the weekend, taxi fares, and expensive brunches add up. That’s not even including luxury goods such as branded bags and holidays.

Buying a new car often isn’t the best idea, either. Cars are a depreciating asset, which means you are unlikely to make a profit from selling it off later. You might argue that you need a car because you have a young family, or are living far away from civilisation. But being in Singapore means you almost always have easy access to public transportation.

6. Not saving enough

This may seem obvious, but without a clear budget or expense sheet, it’s easy to end up spending all your money. If your expenses are difficult for you to track, even with a tracking app, open two accounts. A lack of access to money will help you save either way.

See also: Are you saving enough to retire?

7. Not getting insurance, or overpaying beyond your needs

It is important to cover yourself during emergencies; don’t end up paying for additional policies you may only need when you’re older. The money can be used for other things.

At this stage, you only need a good life insurance plan, health insurance with coverage for hospitalisation fees, and a plan for disability.

See also: Singaporeans flock to retirement policies amid longer life expectancy, increased chronic illnesses

8. Spending too much on housing

Unless you intend to live with your parents or start a family soon, buying a big home isn’t worth it. Apart from the cost of your home, taxes go up as well, especially if you live in private property. Although it may be the Singaporean dream to live in a nice, big, private house, save yourself the agony of being in debt so early in life, and consider upgrading only when you’re looking to expand your family, or when you earn more in future.

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