Monday, 14 December 2015

What Yoga Taught Me About Personal Finance

It has been exactly a year since I became a certified yoga teacher.  It is such a joy to be able to confidently share I have learnt with my students.

What was even more gratifying was I also now see parallels between yoga and another very important aspect of my life: money management. A disciplined practice, self-observation and the pursuit of balance – these are common yogic tenets that can be applied to money management too.
Discipline
Yoga demands discipline; your body will tell you when you skip too many practices.  Similarly, money management requires discipline - discipline to see that you resist temptations, control expenses and build up enough savings for retirement. Results cannot come if it’s a one-off or haphazard effort.

But how does one instill discipline in money management? Aim to “pay yourself first” by saving a fixed percent of your monthly income.  For us Singaporeans, we’ve had a good start with the CPF system, making monthly savings automatic once we start work.  However, this is just a base, you will still need to save a portion of your take-home pay consistently.

If you can afford to save more, here’s a quick tip: extend the “pay yourself first” discipline through the Retirement Sum Topping-Up Scheme. This will earn you not just better risk-free rates (compared to local banks) but also income tax reliefs.

Patience
My yoga master used to quip, “Be patient with your practice, or you will end up a patient yourself!”   In other words, build a strong foundation in basic poses before attempting advanced ones.  Likewise, be patient and think long-term for your investments.

I remembered when I first started investing, it was mainly higher-risk technology unit trusts without really understanding what they were. Now, we park our funds in defensive stocks to take a low-risk, long-term perspective nowadays and our patience has been rewarded with regular dividends, albeit slow capital appreciation.  

Balance
In planning yoga routines, one of the principles is to strike a
balance so that you do not overwork particular muscles. There are what we call "counter poses" to work the muscles in the opposite direction, e.g.  forward folds to counter backbends. 

In investments, we also aim to balance our portfolio so that we are not unduly exposed to a particular industry, sector or market.  This diversification is necessary because you never know when stocks in a particular industry or market suddenly go on a freefall.

Mindfulness
Yoga literally means “the union of body and mind”.  I regularly remind my students to be mindful of the sensations arising in their body as they practise various poses. This is a huge benefit of yoga practice – to look inward and understand oneself better. 

The same can be applied to money management.  Being mindful of my own values and what gives me longer-term satisfaction steers me to make better money decisions.

For me, I prefer to keep my funds in the CPF or own savings to earn risk-free returns or for safer stock investments.  In financial planning, be very aware of your overall financial situation and comfort level for risk-taking.  Stick with it.  Do not blindly follow what others are doing.

Practice
Our yoga master gave us a list of yoga poses and breathing exercises which he insists we practise after the course.  These poses are the must-dos to prepare us for more challenging poses.
I likened these yoga poses to the core financial actions I have to undertake. They may sound “boring” but they prepare us for times when we face difficult financial situations, such as a loss of income or sudden medical emergency.  These actions could include:
  •      Monitoring of expenses and keeping to a budget;
  •      Building a cash emergency fund;
  •      Buying additional medical insurance coverage using integrated shield plans – on top of Medishield Life - to cover medical needs;
  •      Adding to our “investment fund" which I use for buying carefully-researched stocks;
  •      Finding ways to reduce income tax expenses e.g. topping up CPF retirement funds &
  •      Staying abreast of financial news and policies.
As most will admit, money is something that can easily evoke feelings of attachment, fear and envy.  I am thankful my yoga practice keeps me in check and let me find peace on and off the mat. 

2 comments:

  1. Your post makes me want to take up yoga too. I need to lose weight , just like I need to watch my spending :)

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    1. Hi Gigi! If you need a yoga teacher, let me know! All the best to your "resolutions" for the new year!

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