Mistakes on my route to achieving positive personal finance

This year, I bought a total of 5 books, mainly financial knowledge books that teaches you on personal finance and investment. The books are Rich Dad Poor Dad, Guide to Investing by Robert T. Kiyosaki, Mastering your personal finance by Dennis Ng, Secrets of Self-Made Millionairs by Adam Khoo and Make your money work for you by Keon Chee & Ben Fok.
Reading those books inspires and motivates me, at the same time, it makes me reflects on the mistakes I had been making throughout my time to while I am trying to improve my personal finance skills and investments portfolio.


First Mistake:
Saving too little. Since 2007 when I started investing in stock markets. I had never keep any spare cash in my bank. For me, every bonuses, commissions or extra money, I will invest them into the markets. It never occurred to me to keep spare cash for emergency purposes, medical , insurance purposes or just in case needs. The recommended advice is to keep 3-6 months of your monthly income to cover ad-hoc needs. This cash will be also useful to cover expenses should one gets laid off. Or also, this money is also useful when stock markets go through correction. Or some people refer to this money as opportunity funds.
Part of the reason for me keeping all cash in stock was partly to stay in market to enjoy the dividends, also I was too over confident of the market situation. I was perhaps too positive over the market where I believe I could easily cash out from stock market should I need emergency cash.
Unfortunately or should I say fortunately, an incident occurred to me back in July where I needed to use cash to make payment, having to realised the lack of or limited cash inside your bank account, I had to sell off some of my CDLH trust shares to get cash, ironically, the gains I made from the dividends were wiped out the very moment I cash out but luckily, my paper losses were limited to single digit percentage.  But my total losses mounted up to 1KSGD. It was a painful lesson.
This lesson and from repeated readings of the financial books made me wake up. I decided to instill force savings and keep spare cash. I force to pay myself 600SGD into another separate bank account start of every Monthly, all investment income goes into the bank account too as well as all part time property income.
Currently I am now at only 2 months savings. But with part time property income coming in soon, I should be at 3.5 months savings.
With my baby boy delivering in Jan 2012, I will need to use up a substantial amount for baby hospitalisation expenses, confinement expenses as well as others.
It will be a journey back to achieving my target of 4 months of safety spare cash. But with the many corrections in the stock market, having spare cash is also useful to pick up bargain stocks.

Mistake # 2
Not reinvesting dividend back into market. I had not been practising the slow way to wealth by power of compounding. I realised that the reason was I was spending my dividends away on expenses. It is a hard reality that I need to cut down on my own spending. With the burden to give both parents allowances, the need to support my pregnant wife and to clear my bills, I need to cut down on spending and save more. Moreover, I should not touch my dividends.
I look back at myself for challenging friends on the need to buy expensive continental cars when they had not even started their financial goals, maybe I need to reflect on myself first before I can give my opinions to them ..
Moving on, I had reinvested my Q3 Suntec reit dividend by buying 1 lot of Suntec share at 1.075SGD. I might not know if there will be any major correction next year, but one thing I will need to follow is to use the way of compounding to maximise my gains over the coming years.
Happy compounding.