2 in 3 Singaporeans save no more than 20% of monthly salary

[Musicwhiz]

It is natural for people to upgrade their lifestyle to reward themselves for upgrading their income. However, I think a person has a better chance at happiness and financial freedom if he takes special care not to upgrade his lifestyle too much as his income goes up.

Being able to be contented at low cost means a better chance at happiness because it is easier and cheaper to stay happy.

Hi hyom,

What you said resonates with me, as this is what I have been doing (and continuing to do, hopefully) for the last 4-5 years. Keeping my lifestyle the same and simple while my income has gone up is not much of an effort anymore, as long as one realizes that (as you say) the simple things in life can satisfy oneself. No need for expensive tastes or "bling" to feel that one has "made it" in this world, in fact much of the satisfaction and happiness should be internal, and contentment will then follow.

From my observation and discussions with friends, it seems this phenomenon of scaling up your lifestyle along with salary is pretty commonplace. Sometimes it creeps up on them slowly as their salary rises over the years, while in other instances there is a significant "jump" in their salary which sort of unlocks the "beast" within and makes them go on a spending spree, after which they find it hard to come back down to "baseline" levels! Whatever the case, the money vaporizes nonetheless. Perhaps this is why those earning >$10,000 a month also save "just" 20% or $2,000. If they could keep to their lifestyle when they used to earn $2,000 a month, then they may perhaps be able to save $7,000 a month?

Being contented while one is not earning much would definitely be easier for the person in case he loses his job or suffers a pay cut.

[Temperament]

It is natural for people to upgrade their lifestyle to reward themselves for upgrading their income. However, I think a person has a better chance at happiness and financial freedom if he takes special care not to upgrade his lifestyle too much as his income goes up.

Being able to be contented at low cost means a better chance at happiness because it is easier and cheaper to stay happy.

Hi hyom,

What you said resonates with me, as this is what I have been doing (and continuing to do, hopefully) for the last 4-5 years. Keeping my lifestyle the same and simple while my income has gone up is not much of an effort anymore, as long as one realizes that (as you say) the simple things in life can satisfy oneself. No need for expensive tastes or "bling" to feel that one has "made it" in this world, in fact much of the satisfaction and happiness should be internal, and contentment will then follow.

From my observation and discussions with friends, it seems this phenomenon of scaling up your lifestyle along with salary is pretty commonplace. Sometimes it creeps up on them slowly as their salary rises over the years, while in other instances there is a significant "jump" in their salary which sort of unlocks the "beast" within and makes them go on a spending spree, after which they find it hard to come back down to "baseline" levels! Whatever the case, the money vaporizes nonetheless. Perhaps this is why those earning >$10,000 a month also save "just" 20% or $2,000. If they could keep to their lifestyle when they used to earn $2,000 a month, then they may perhaps be able to save $7,000 a month?

Being contented while one is not earning much would definitely be easier for the person in case he loses his job or suffers a pay cut.

i concur:
We choose to live frugally but we are debt free and not worry too much about the next meal. We only splurge occasionally on normal restaurant's food after we have made our 1st 100K+ from investment. In choosing a "low maintenance" life style we are able to save, to invest and most important to grow our nest-egg. i always tell people when young, we accumulate and accumulate that in your "retirement" years you don't have to downgrade too much or even maintain the same lifestyle. Some may even able to upgrade if they don't want to leave too much for next of kin. Ha! Ha!
Now we are "retired", we hope we can live as we want without worrying too much about running out of money and able to leave behind a little legacy. But we still practise, "知 足 者 常 乐". Amen.
Shalom.

[Jared Seah]

Either we insensitive or very out-of-touch - like the young minister who still thinks we can buy hawker centre char quay tiao at $1.50!?

If you are referring to Kee Chieu, I think he mentioned Chye Tow Kway not Char Kway Tiao. Moreover he did say "even if".

touzi,

I am using my real name here.

So when pointing the willow but kicking the oak, I have to use "xuan wai zhi yin"

LOL!

P.S. I suffer from selective perception. I straight away zeroed in on $1.50; but you can spot the "even if". Impressed!

[Mr Nobody]

It is a good idea to maintain your lifestyle after a pay rise... -- you build your nest much faster.

It is also a good idea not to leave too much behind --> not only it affects the next generation's motivation to work, you will also be taken as a sucker (work so hard, save so much, invest so well but the lucky ones just inherit everything).

I am also into a "low maintenance" lifestyle - it allows me to save & invest more, it also means I don't need to have a lot, before I can retire.

[Musicwhiz]

It is a good idea to maintain your lifestyle after a pay rise... -- you build your nest much faster.

The problem with staying where you are in terms of lifestyle adjustment is very much a psychological one. In Singapore and in fact throughout the world, earning more would automatically elevate one's status and brings about a huge increase in ego, thus most people would feel they "deserve" the better things in life. The lifestyle inflation would thus occur, and this psychology is made even harder to break as people usually end up working harder to earn more money (or to justify a higher salary), thus they feel they have to spend more to "relax" or "pamper" themselves.

Classic vicious cycle - earn more, spend more. Trapped forever in the relentless rat race!

[ken]

From my view point, the circle of friends and their engaging activities may influence their spending habits and that will affect their saving habits.

For example, there are people who do not eat in food courts and if you have a friend who says let's go clubbing and you tagged along........ Say no, you are the weird one out.
Group conformity is very strong.

This will definitely burnt a hole in your wallet.

Hopefully they don't end like Kodak, with liabilities more than assets.

[mrEngineer]

For 10k a month earners, it is common for them to think that they can start to afford the next mickey mouse apartment installment (2-3k)when they are already servicing 1-2 already! So how do you think they can save more than 20% (meaning putting into bank and rot)? I seen so many examples from front office bankers. It is not always that people start to splurge unnecessarily with high income. Otherwise how do you think that 90% singaporeans can afford the Sengkang condo?

The fundamental flaw in such thinking is that they can maintain such salaries for 30 years loan period and the housing prices will go up forever.

[Mr Nobody]

...In Singapore and in fact throughout the world, earning more would automatically elevate one's status and brings about a huge increase in ego, thus most people would feel they "deserve" the better things in life. The lifestyle inflation would thus occur, and this psychology is made even harder to break as people usually end up working harder to earn more money (or to justify a higher salary), thus they feel they have to spend more to "relax" or "pamper" themselves.

Classic vicious cycle - earn more, spend more. Trapped forever in the relentless rat race!

In the book "How much is enough?" by the authors Arun Abey & Andrew Ford, this is referred to as "hedonic threadmill" - once you are on the threadmill, you have to keep running. If you run faster, you will have to keep running faster.

We choose the "slow walk".

[valuehunter]

I guess it also depends on how people view or understand the concept of saving. My personal opinion and practice is that squirreling cash into the savings or fixed deposit account is a necessity to manage and cope with the vicissitudes of life and afford future foreseeable planned capex. Buying the appropriate insurance plan(s) serve to protect against unforeseen events. Once these are taken care of, prudent investing is then a necessary capex (not savings) for funding long term future needs. Investing is spending for the future, I feel.

With this mindset, as with most expenditure, investments must then be budgeted for and be well and thoroughly considered so as to extract decent and reasonable value from the capex. It is also important to invest as much as one can afford as young as possible so as to extract most value from the capex. From my experience, the value of compounding one's returns cannot be underestimated.

Just my two cents worth of view..

[Blackjack]

Just another perspective - most of us who save consciously in the hope of fulfilment and 'a life without worries' as some may put, is done so clearly in the implicit hope of looking towards early retirement. Hands up if you would want to work for as long as you can? Of course we don't want to confuse the idea of wanting to work after retirement IF we really need a day job to sustain our 'active aging', versus needing to carry on working because we need to survive. By inference, would this then mean that retirement is just a quick and convenient solution to sustain a lifestyle that we would be happy to live out? (Okay maybe its not exactly a quick and convenient solution) If so, can it then imply that for those who are already happy living out their daily lives currently are already financially free, even if they 'only' managed to save 20% of their monthly salary? Hey, these people are happier than you and me who're trying desperately to save and retire!

Saving is a virtue for those who can afford it but it may be less common for the majority of people, especially if you include categories of people who belong to being less educated and hence lower pay, single breadwinner families, low financial literacy, and so on, so I'm not too surprised even if 2 in 3 Singaporeans fail to save more than 20% of their monthly salary. Especially for those people who are participating in this forum, if we only include those in our immediate circle then of course the results may seem alarming, than if we were to look beyond our immediate circle of friends. I did some 'financial planning' for someone close sometime back and arrived at the same conclusion as what some forummers here already did - Sometimes, there is little value is saving more instead of trying to make more money instead, so trying to derive more means of 'money saving techniques' is not really aimed at tackling the real issue. There is more meat to save if one already has more meat to start with. Can't possibly tell someone chewing on a piece of bone to save some leftover oil for the next meal right?

That said I belong to the 'luckier' category who can manage to save more than 20% of my monthly income, but hey! No one saves their way to become rich right?