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.

The Road to Wealth

Look through the Forbes’ list of the richest people in the world and you’ll find the majority of billionaires to be successful business owners, from Technology companies to Retail Shop owners to Property Developers. So what does this implies? That the surest way to wealth is to have your own business.

I guess no one became a billionaire just by working for others, in a 9 to 6 job. However, not everyone have the passion, drive, guts, and interest to be business owners or entrepreneurs.

So what are normal folks like us to do to even become remotely wealthy? While not everyone can be a billionaire, most people can amass a million or two (or even more), within their lifetime or by the time they retire. All it takes is discipline and determination, having the right mindset, and good planning. Or like what a friend like to say, have a good system in place.

I do understand that everyone is different, and not all are interested in being rich or to be able retire comfortably. Some just want to enjoy life, be lazy and comfortable, and not work too hard in life. However if you are like me and dream of being rich enough to have a comfortable retirement or to leave at least a million or two behind for your next generation, then you should seriously be following these steps.

1) Earn more
If you’re lucky enough to be born in a first world country like Singapore, then you should realized that there’s opportunities everywhere for you to make more money. From starting your own blog shop to teaching tuition to taking up a second job. I have a few friends whom I totally admire, who are sacrificing their time and energy to earn more while they are still young, or fulfilling their dreams of being an entrepreneur on the sideline while working for others. Either that or be so good at your main job that you are getting good increment and bonuses year after year. Don’t complain that you’re not earning enough. There’s always something that can be done to improve your current situation.

2) Avoid lifestyle inflation
How many of us are spending more now that we are making more money? So much more than when we first came out to work. I sure am guilty of that. I remember during my internship days, $600 a month was more than enough for me to both spend and save. And now, with many of us having a salary of 10times over, we are finding ourselves not having the ability to save. It is important to look back at our younger days and reminisce of how “free” we were from material wants and stick to that. Resist the urge to spend your increment from now on, and try not to splurge your bonuses away.

3) Save the differences
It is so simple, but many of us are not doing it. You earn a paycheck, you pay for needs and some wants, and you save the rest. The bigger the gap between our salary and spendings, the faster our savings will grow. I have friends who are not exactly high earners, yet they have an impressive amount of money amassed due to prudent spending and wise investing. They end up doing better than most high earners!

4) Invest
Once you set aside your emergency funds, you should invest to grow your wealth. Learn to study and pick up good businesses and invest in them. There are many things we can look at. From ETFs to Blue chips to REITs. It is important to invest in order to beat inflation and to slowly build up a portfolio that generate passive income to fund your dreams, which at the same time, offers capital appreciation so that you are not faced with a declining net worth as you grow older.

I know the steps sounds really simple, but not many can do them, or are willing to do them. Those in their 20s and 30s think that they have all the time in the world to start when they have their fair share of fun. However, time passes in such a way that before you know it, the bulk of it is already long gone.

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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!

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.