What are you going to do with your year end bonus?

It’s the time of the year again, where Orchard Road is lined with bright glittery lights, and Xmas trees standing proud and tall in malls. My hubby and I headed to town last Saturday, hoping to do some early Xmas shopping for our yearly gift exchange with friends. But alas, the crowded mall and long lines at cashiers turn us off and we head straight to queue for our dinner instead. It’s the time of the year whereby people are generally in a good and giving mood, and it’s not just because Xmas is a few weeks away. “Most of these people must have gotten their year end bonus and increment!” I told my hubby, and he nodded in agreement! Having (more) money always put people in good mood.

So what do most Singaporeans do with their year end bonuses, after working hard for a full year? I guess it can be broken down into a few categories:

1) Buy, buy, and buy:
During the first two years of my working life, my bonus allows me to buy things I couldn’t afford to buy during the past 11 months with my miserable monthly salary. This happens to a lot of people. We see bonuses as a mean whereby we can finally buy what we have been lusting over the past months. It usually involve some big ticket items like a designer bag, gadgets, upgrading of cars etc. For boyfriends and husbands, it means splurging on your beautiful girlfriend or wife, and you get her a Tiffany and Co earring, or a Pandora bracelet for Christmas. For parents, it means buying the Wii game set or the latest iPad Air that your kid had been begging you for the past one year. For newly weds, it means a nice painting for your new home, or getting the matching set of cutleries that you absolutely need. For the materialistic princess like I was, it means getting the latest designer bag to outshine your colleagues.

2) Clearing credit card balances:
I started carrying a balance in my credit card since the age of 24. The amount started small, like 2-3k in credit card balances, and the first thing I did when I got my bonus was to clear the outstanding amount. It started with one card, then two, then three… Until I lost track of it. I sure hope not many people are like me, for it sure feels lousy to be dumping your hard earned money to repay debts.

3) It disappears from your bank account a few months after you got it:
I can so relate to this! Sometimes, after clearing my credit card debt, there will still be a little bit of left overs, but hey, it just disappears out of thin air a few months down the road. I still remember the first time I had my 5 figure bonus (about 12k after CPF contribution), and I cleared about 4k in debt. I thought to myself, after clearing my debt, I still have 8k left. That’s still ALOT of money for me to save! And I promise myself I’ll save the balance. A month later, I subscribed to 2k worth of my company’s shares, and a few months later, the remaining 6k really disappears into thin air, not to be seen ever again. And then I wonder, how many people are like that?

You save or invest it:
Yes, you decide not to splurge, to save or invest your hard earned money, and watch it like a hawk. How many of us can behave like we did not receive our bonuses, and resist not spending a single dime? I did it with my last year’s bonus. The first thing I did when I receive my bonus was to hunt for a good Fixed Deposit rate. I still remember waking up early on a Saturday morning, with hubby in tow, walking around the mall asking for rates from the different banks. I finally deposited my money with UOB, into a 4 months FD. Albeit some bad decisions and splurging on bags during my honeymoon (yes, the old me resurfaced briefly), I still have my hard earned savings and part of my past year bonus to show for in my bank account. And remember the 2k worth of shares I bought with previous bonus money? It was one of my best money decisions EVER. I sold the shares last year, and 3years down the road from the day I got that bonus, the proceeds still forms part of my net worth (albeit not a lot). I dare say, the rewards associated with saving and investing is way way way greater than splurging on a branded bag or two. And again I wonder, how many people are like that, choosing to save their bonuses rather than spending it.

I’m really really excited about getting my bonus in a few weeks’ time. Not because I have a wish list of things to buy, but for the fact that I’m getting closer and closer to my goal. That is, to retire early to do what I want and whenever I want, and gaining financial freedom.

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Mentality of young working adults in Singapore

Sorry guys! It’s been a long long time since I last wrote anything. I really missed writing, and time just passes by so quickly unknowingly!

I’m sure many of us would have come across this video clip from the channel 8 show 118, where a young man rants about his difficult life situation caused by our current society.

Here’s the English translation:
“I’m not the only one who is desperate to make money. Do go around asking other young people. Who’s not worried? After graduation and after serving the army, I’ll be 23-24 years old. In a blink of an eye, I’ll be 30. Within these few short years, I need to settle down, get married, have a place of my own, and start a family. How are these even possible without having money? A HDB unit easily cost over 300 – 400k. Let’s talk about the daily necessary expenses. If you work in the CBD area, you need to take the train on a daily basis. If you happen to be late or be in a hurry, you’ll need to spend money on cabs. Transportation can costs up to $6-$7 a day! As for lunch, the cheapest meal you can find still cost you $5-$6 a day. A cup of coffee at a coffee joint set you back by about $6-$7! And in order to response to the government’s encouragement on setting up a family early, I need to find a girlfriend. To find a girlfriend, I’ll have to bring her out on dates, dinner, movies, overseas trips once in a while, and to throw in a designer bag or two! Even if I look like a celebrity, no girls will want me if I don’t spend on her. And how about those who have plans to upgrade themselves or to further their studies? They need to take up study loans, and to give family allowances at the same time. When it’s time to settle down, a wedding banquet easily cost over $1,000 per table, while wedding photography package cost $3,000 to $4,000! All these cost money! My generation doesn’t ask for a luxurious lifestyle. We just want to maintain the basic standard of living. To do so, we have to earn more to sustain ourselves. I’m sure you wouldn’t want your son to come to you asking for money to pay for his wedding, or money to pay for his own flats. Yes, I do agree my methods in earning money is too extreme and I’m in the wrong. But the fault doesn’t lie with me, it lies in this society!”

So what’s going on with the younger generation these days, you may wonder. Or do you find yourself agreeing with what the actor had expressed in the show? Looking at various websites such as “The Real Singapore”, it seems that many young people do find life to be quite difficult in Singapore.

Personal thoughts. Being a young Singaporean myself (okay, maybe not THAT young anymore), I do find that cost of living did went up quite substantially over the last decade, especially in terms of housing and owning a car. But what do you expect? Inflation happens globally, not just in Singapore, and government has to maintain control over the number of vehicles on the road, and Singapore only has so much land area. I also feel that it is how you choose to live your life that’s the deciding factor whether things are affordable, or not.

I’ve been working in the CBD and town area my entire working life (almost 10years now), and I realised lunch can be very cheap, or very expensive. Again, depending on your lifestyles. During my younger days, I can spend more than $20 on lunch almost everyday. But hey, you may not be aware, but there are still $3.00 chicken rice or soup noodle in town! As for drinks, what I’m doing now is to refrain from ordering drinks from the coffee shop and just head back to the office for some H2O or coffee or tea from the office pantry. It’s free, and it’s healthier too!! As for transport, I spend less than $100 a month on public transport, and trust me, I stay more than an hour away from my workplace.

As for settling down, getting married and buying a place of your own, such life events isn’t unique only to Singaporean youth. If you watch what you spend and consistently save up over the years, you CAN afford to get married and have your own place. And don’t forget, you’re not bearing these costs alone, you have your significant other facing what lies ahead with you.

Forget that girl that needs you to wine and dine her, bring her for overseas trips, and for you to buy her designer stuffs. MOST Singaporean girls are not like that. At least not me and the circle of girls I hang out with. Only a gold digger would want you to constantly spend on her, and I’m sure if you’re a guy, you wouldn’t want to have someone like that as your wife. Someone who would just take, and not give, who wants to enjoy life and expect you to do all the hard work. (I have so much to write about girls like that, but let’s save a full post on that, for another day).

My husband and I did worry about the costs of getting married and getting our own place when we were younger, and so did our circle of friends. Turn out, life really isn’t that difficult afterall. After working for almost 10years, our HDB flats sort of took care of itself thanks to our CPF accounts. We only need a loan of about 200k, out of 460k, and repayment can be easily be made with our monthly CPF contributions.

As for weddings, having a wedding banquet at a 5 star hotel IS NOT THE NORM, although I do hear of couples making money from their wedding if they hold it at nicer venues. Spend within your means. A wedding can be simple and feels cozy without getting yourself into debt over it. If you or your significant half really want an extravagant wedding, there is nothing wrong with that if you can afford it. The key lies with proper planning and budgeting, and spending within your means.

And advice from a 30 year old just married woman to the 20 something out there, RELAX. Life isn’t hard if you work hard, make a decent living, plan and save for what’s important (no, not that bag). Learn to filter out what’s important and what’s not, and make decisions based on your life values. You’ll soon realised there are just too many areas where you no longer need to waste your hard earn money on.

Total Expenses for 2013

Total Expenses for 2013

Total Expenses for 2013

I’ve been diligently making a conscious effort to cut down on expenses, pay down debt and save money, and seems like my hard work has paid off!

My expenses still seems to be on the high side mainly due to the fact that my parents have retired, and I’m giving them close to 1k a month. I’ve also contributed slightly over 8k for debt repayment. It’s still a painful reminder of the amount of debt I’ve dug myself into, but am glad I finally have control of my financial life!

Without debt repayment, my total expenses amount to $33,944 which is a comfortable $2,829 per month. I don’t think I can cut my expenses down much further as it is already on the conservative side.

So the golden question. How much do I need upon retirement?
Looking at this table, I probably need about $14,600 per annum for living expenses, which is about $1,217 per month. Do note that these figures have yet to be adjusted for inflation, it’s just a rough guide.

Here’s the breakdown on an annual basis:

Insurance – $3,000
My insurance premium is a 15yr term insurance which I’ll stop paying when I turn 39. However, I believe I need to step up on health care insurance due to old age, and premium usually cost more the older we are.

Phone – $600

Transport – $1,000

F&B – $5,000
I’m a foodie and I don’t plan to scrimp on food.

Travel – $5,000
I’ll probably not shop much or have much entertainment, so I’ll reserve $5,000 a year for traveling and vacations.

So what’s the minimum amount I need to have for retirement? A quick calculation shows $300,000 is enough to fund my retirement. A $300k portfolio with an average return of 5% per annum is enough to generate me $15,000. Just enough for the expenses listed above!

Wedding Budget

Wedding is one of those life events that depletes or eats into a major part of our savings. Albeit money well spent, it is important not to go into debt for just a one day event. Having been debt ridden, I was extra careful and one of the very first thing on my planning list was to work out a budget even before we started on our wedding preparation.

Our Wedding Budget

Our Wedding Budget

(Do note that I did not include the cost of my engagement ring, dowry price, betrothal gifts and red packets collected as these are subjective and confidential.)

Areas we saved on:

1) We decided on a lunch banquet for our wedding because we refused to pay 30% more for dinner at the same hotel, for the same ballroom, and with everything else being the same just because one was held during the day, and the other at night.

Amount saved: $8,845.20 (Lunch costs $968++ per tables, Dinner at $1,238++ per table)

2) Instead of going to a dental clinic to have our teeth whiten at $1,000 per person, we decided to purchase one of those Groupon vouchers at $99 each. I would say it works as our teeth were a few shades lighter, but more sessions are recommended for better results.

Amount saved: $1,802.00

3) We also saved on paying for a Solemnization Venue by having our solemnization done in the hotel. However, do note that some hotels do charge a rate ranging from $2,000 to $5,000 for using their venue outside of the ballroom. Goodwood Park hotel actually quoted me $3,000 to use their poolside for solemnization.

4) I didn’t get a wedding ring, and instead, my engagement ring also served as my wedding ring as I find it unnecessary to carry both rings. I also couldn’t find something that I really fancy after countless trips to the jewelry stores, and did not want to buy a ring just for the sake of buying.

Amount saved: $2,000

Areas we splurged on:
1) We engaged a 3 piece live band to play live music on our wedding day for a short span of 1.5hrs at $1,498.00. However, we felt that it was worth it for the nice ambience the live music had created and many guests actually enquired about the band after.

2) Dessert Booth and Peking Duck Booth. These are pre-lunch reception treats that we ordered for guests who arrived early, as by the time the lunch banquet officially starts, it’ll be close to 2pm already.

3) Rental of additional wedding gown at special rate of $500 from our bridal studio. Our wedding studio provides us with 2 actual day gowns but I wanted another gown for my solemnization. Although I admit it was quite a splurge for renting a gown that I only wore for less than 2 hours, I REALLY liked it and had budgeted for it and $500 was actually a steal with additional gowns costing from $800 to $1,000 each usually.

Costs we could have avoided:
While the above costs are splurges which we willingly paid, the below items could have been avoided as they have no added value to our wedding.

1) We topped up an additional $1,500 for extra 12 photos and for all hard copies for our pre-wedding photo shoot. Post wedding, we did not even bother to look at the photos again and felt that this amount could have been for better use.

2) We also topped up an additional cost of $500 for a more senior photographer (an Art Director featured in the Tatler magazine) to shoot our pre-wedding photo shoot. This was a total waste of money as the photographers are actually all equally good, and we weren’t exactly pleased with how the photos turned out as well.

3) I bought a Chanel earring for $490 for and only wore it once since my wedding. It was totally unnecessary, and now I feel like selling it on ebay already.

All in all, there was a potential $2,490 which we could have saved on.

I hope my unmarried friends could use this to plan their wedding better, and do remember not to get overly caught up in a one day event, as after all, it is the marriage that matters the most.

Happy planning!

Expenses – Aug 2012 vs Aug 2013

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Sometimes, its not how much you earn, but how much you spend (or save) that has an impact on your financial life. I have known people who earned the above average salaries but still live paycheck to paycheck due to a flamboyant lifestyle. I also know someone who does not earn alot, yet is able to build up quite a substantial amount of savings over the years. I decided to look back on my spendings for Aug 2013 vs August 2012, to see how much I have cut down. I had a hard time sorting through my previous year’s bank statements and credit card bills as I didn’t used to have a budget system in place.

Recurring Expenses (SGD) Aug-12 Aug-13 Differences
Parents Allowance 827 815 (13)
Credit Card Installments 450 486 36
Income Tax 89 132 43
Insurance 208 208
Mobile Phone/iPad Subscription 155 105 (50)
Transport 230 100 (130)
Food & Entertainment 1,078 700 (378)
Shopping & Misc 439 199 (240)
Unaccounted for 640 (640)
4,116 2,744 (1,372)

1) Credit Card Instalment – Zero saving:

From the first glance, it looks as if I am repaying the same amount of debt as I had from a year ago. However, I had previously carried a balance on all of my credit cards (3 card in total), and $450 is just the minimum balance I pay each month. I was in such a mess that I actually did not bother opening the mails for my credit card statements, as the balances were just too painful to look at. I just automatically pay $150 a month, hoping that by paying the minimal amount, my credit card debt would magically disappear on its own. Now, $486 is the true value of how much I am actually paying each month, which is solely made up of 24 months installments I foolishly signed up for bags/facial etc a year ago. I no longer fear opening my credit card statements as they usually show a ZERO balance now.

2) Mobile Phone/iPad Subscription – $50 saved:

I managed to get a better plan on my monthly subscription hence the savings of $50 a month.

3) Transport – $130 saved:

I managed to saved $130 on transport from not taking taxis/cabs whenever I am too lazy to take the bus or MRT. Singapore is a very small and relatively efficient place especially when it comes to transport infrastructure. So taking a cab is more of a luxury than necessity most of the time.

4) Food & Entertainment – $378 saved:

It’s scary how much I used to spend on food and drinks and other leisure activities. Although the current $700 a month on Food is still on the high side compared to some of my more frugal friends, I am pretty happy with the savings of $300 or more, and think it is quite substantial. Eating out is one of those things that I truly enjoy, so I’m not too big on cutting down and being frugal on this area. Drinking and clubbing on the other hand is something that I am able to cut down on, hence the saving of over $300.

5) Shopping & Misc – $240 saved:

I only set a budget of $100 for shopping and misc items each month, so I had actually exceeded my budget for Aug 2013. Comparatively, I did stop shopping online which contributed to the bulk of my overspending in this category. I now cringed when I open my drawer full of new clothes that I had bought on impulse. They are now part of the clutters in my messy room.

6) Unaccounted for – total elimination!

This is the most interesting category in my list of expenses. These are ATM withdrawal which I had never bother tracking and I do not exactly know what I spent on. It is possibly made up of food, misc items, mindless shopping, and taxi fares. This year, I make sure all my money is being accounted for using a excel spreadsheet that I created and now all expenses are accounted for. It feels great to be in control!

I used to think that there is no way to I can minimise spending and to start saving money. What I have here shows that through conscious efforts and the motivation to improve financially, IT IS POSSIBLE. It’s just a matter of how badly you want to save, to forgo instant gratification and save for something bigger like a fulfilling retirement, financial freedom, or even owning your dream home.

I am very happy with the amount I’m saving each month. A year ago, I had no idea saving money is so easy, After putting my mind to it and building a budget system for myself, it has become an habit. I now hope to maintain the same level of spending, and at the same time, to drastically work on increasing my income so that I can save more.