2 interesting Straits Times articles in the short span of 1 week.
- High income, low wealth: Over half of adults in Singapore don’t watch their spending
- Never too early to teach your kids about investing and cash flow
According to a survey conducted by the Organisation for Economic Cooperation and Development (OECD), around 25% of adults in the 20 countries surveyed have low levels of financial literacy, which can lead to poor financial decisions and negative financial outcomes.
Please, students of economics, realise you are in a privileged position. Don’t just study for your exam grades! Learn economics so that you can become more financially savvy! In doing so, you will also be a more attractive marriage proposition!!!
Here are 5 ways studying economics can help:
1) Understanding the Economy: Economics helps you understand how the economy works and how differet factors like demand and supply, competition, inflation and interest rates can impact the overall economic environment and eventually your life! This knowledge can help you make better financial decisions, such as when to invest, when to save, where to invest and when to spend.
My application of economics is how I am now paying 1.12% interest rates in loan whilst earning 3.1% – 4.2% in very safe investments. People thought I was crazy for going with a fixed loan rate that was going at a substantially higher interest rate than a flexible loan scheme (about 0.75% then but about 4% now!). I applied my economics knowledge and saw what was coming around the corner. Inflation! And higher interest rates!
2) Understanding Financial Markets: Economics can also help you understand how financial markets work and how different financial instruments like stocks, bonds, and mutual funds can be used to achieve financial goals. This knowledge can help you make better investment decisions and manage your portfolio effectively.
Well, I have been telling some of my students since last year that $$$ can be earned in US$ : Jap Yen Forex trades. So far so good! (Don’t get me wrong, I also told them it was not their time to dabble in such investments as there are always risks involved. But it was to show them how we can actually apply what we learn.) Again, it is my application of economics – of what is likely to affect the demand and supply of US$ : Yen in the foreign exchange market, especially their central bank policy actions that allowed me to make such forecasts.
3) Do Big Business!: There are actually many useful business concepts in economics. From elasticities to different firm objectivesd, pricing strategies such as price discrimination and non-pricing strategies such as product differentiation – plenty plenty to help one succeed in entrepreneurship, which is one of the best investments and probably the most stable job in the future!
Check out this post on how I used economics to discover a highly lucrative business, which otherwise would be under our radars!
4) Be Financially Prudent: In Economics, we learn about issues related to financing of budget and trade deficits and the possibility of debt crises. So all these are very useful ideas to apply at a personal level. Lessons of financial prudence and to realise that ultimately all debt has to be repaid and with interest!!
Do you really want to enjoy ALOT now and SUFFER HELL later? Or is it better to enjoy some now and even more so in the future? Students learn that just like for governments, they need to make a budget and have priorities on where to allocate their funds to. To cut down debt as soon as possible and to always remember that their spending decisions incur opportunity cost. We also see how it is a wonderful thing that the Singapore government has huge national reserves that it can aggressively tap on (about S$ 50 bn!) to weather storms like the Covid pandemic, without which life in Singapore would have been much worse!
5) Hone Analytical and Decision Making Skills: In tackling case studies, a fair bit of data and graphical analysis is needed. These are also needed to assess any Investment opportunity. Higher-order-thinking and Judgments also have to be made in answering large-mark case study and essay questions. In TET, we train our students to really be able to generate such analysis and judgments and not rely on regurgitation (which is not even a fool-proof way to score in exams these days). These skills will come in very handy for your future.
Together with the learning of rational decision making model, marginal analysis and learning to always consider opportunity costs and avoid sunk cost fallacy – all these are so awesomely important for decision making in life, career and investments! Check out our post on applying opportunity costs to real life.
In short, learning economics can provide a strong foundation for becoming more financially savvy and financially literate. It will empower you to succeed in life!
Check out this post for other reasons why you should learn economics.
And learn it the right way! Not regurgitating to try to score an A…most will fail trying anyway…This is why many top JC and IB students attend our Economics Tuition.
About The Economics Tutor
Founded by Kelvin Hong in 1998, The Economics Tutor is one of the leading economics tuition in Singapore. We provide a comprehensive program to guide students in understanding complex economic concepts and applying them through case study analyses, essay writing and discussion of real world events.
For 24 years, the way we teach JC Economics Tuition (A Level Economics Tuition) and IB Economics Tuition classes helped learners appreciate economics and everything it entails on a much larger scale. We take things step-by-step, implement effective techniques in memorising frameworks and give every student the chance to nurture their ideas.
We don’t just solely focus on helping you get stellar grades and perfect scores. We make sure that we also hone the critical thinking skills and investment / business decisions you can use outside the four walls of your classroom.
Looking for a fun, engaging and probably the best economics tutor in Singapore? Look no further—check out our extensive and high quality economics resources on the website such as the IB and A Level Economics Model Essays. Book your lesson today and master the nuances of economics in our next class!