I want to save $10,000 a year.

I have this conversation with my Mother last night which makes me wonder whether personal finance should be taught to everyone.

It started with my Mother coming into my room, pondering aloud whether it is worthwhile for her to continue working at her job while complaining about the high cost of public transport in Singapore. I walked her through the maths and came into conclusions that transportation cost does not eat up her whole salary.

Knowing that my Mother isn't financially savvy, I continued to probe further on what is her expectations and learn that she is trying to save $10,000 a year when her basic annual take home salary is $9600.

From there, I tried explaining that in order to see an increase in personal wealth, you need to do the following:

1. Cut expenses.
   Going on 2 overseas holidays a year is not exactly the best way to do so.
   
2. Increase gross salary.
   Not possible for an uneducated worker near retirement age.
   
3. Alternative income.
   Frankly, investment is not for everyone and speculation is even worse. Another part time job will kill her. The best I can do for her is to convince her not to put $50,000 in a fixed deposit for a measly $900 bucks. That's 1.8% interest in an environment that is expecting 2.5%-3.5% inflation rate in 2012.

I went on to say that going by the advice by financial planners is good but typically useless. You can find out your income and your expenses, but the will power to perform the 3 items above is all she needs. As long as she is proactively doing the 3 items, her bank balance will grow.

As expected, she ended up walking out of the room looking confused. This reenforce my conviction to teach my kids if any in the future the importance of financial education.