Young, Single and Spending too Much?


Singapore is a great place to raise a family and also a fantastic island to live in during your twenties when you are young and carefree. A notorious city for high salaries, Singapore is a great place to earn a decent living after just leaving University, but it is also a very good place to spend your money. Whether it is shopping trips down Orchard Road, Brunches in 5-Star hotels or drinking along the quays or at the beach; Singapore is a very easy place to spend all of your hard earned cash without proper financial planning.

There is plenty of advice out there for long term financial planning for families and wealth management for those who have already made their fortunes. There is not perhaps as much guidance for single people living and working here in Singapore who are trying to balance a good working and social life as well as saving a little along the way to show for their time spent here.

One aspect of saving that is rarely taken seriously to those under the age of 30 is that of retirement or pension planning. You’re never too young to start planning for your retirement. In fact, most financial planners bemoan the fact that clients often wait too long to start saving for their golden years.

This procrastination can result in more aggressive or risky investment strategies that can leave older investors more vulnerable to short-term fluctuations in the market that diminish their retirement savings.

But starting early and sticking to a sensible, long-term retirement saving plan not only helps younger workers better prepare for retirement, it sets the foundation for sound economic decision-making throughout their lives.

A few changes and well thought out practices coupled with a bit of self-discipline can make all the difference in your financial planning, and to secure your future.

Live below your means

The key is to live on less than you earn. This can be a lot easier said than done in Singapore where a pint of beer can cost up to $22. Leave yourself some breathing room so you don’t spend up to or above your limit. On your next pay check, try to save more and spend less. Find an experienced financial planner who can help you visualize and plan for your long-term retirement goals and try to save between 3% to 10% of your monthly salary to invest in that pursuit.

Separate account for saving

Even if it’s only a few bucks a month. When younger workers are first starting out and trying to establish a career, they’re often tied down by student loans or major purchases such as a car, their first home or – more often than not – lingering credit card debt.

The trick is to incorporate savings into your budget before you become accustomed to spending it every month. By opening a separate savings account or structured investment plan you will soon see your savings escalate without much effort on your behalf, and you will be far less likely to want to spend those savings.

Discipline, not debt

The sooner you learn this fundamental philosophy, the better. If you have debt – whatever the source – you will need to organize it in order of interest rates and begin paying down the outstanding balances with the highest interest rates first. It might even be worthwhile to consider consolidating all loans under one umbrella – particularly if a lower overall interest rate can be negotiated.

The key to good financial planning is to clear out as much debt as possible as fast as possible so more of your monthly income can be put to use in long-term investments that will pay huge dividends 30 or 40 years down the road.

Emergencies Only

As a financial planning rule of thumb, an emergency fund should be about three times your monthly expenses if you’re single and only used for emergencies.

Stash away whatever rainy day funds you can in the best possible interest rate accounts you can find and leave it alone. This is the parachute you may or may not need and will prevent you from taking on more debt and interrupting your established retirement savings plan when something unexpected happens.

Analyse your spending habits

Let’s say, on average, you spend $10 a day on lunch. That’s $50 a week and $2,600 a year. If you earn $50,000 a year, you could potentially save up to 5% of your annual salary by brown-bagging your lunch. Apply the same scrutiny to coffee and cocktails after work and it all soon adds up.

By reining in these non-essential expenses, you’ll have more money to throw into your savings, longer term plans and other income-generating investments that multiply substantially over the course of three or four decades.

The views expressed in this article are those of the author and do not necessarily reflect the views of AAM Advisory Pte Ltd. This document/article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any securities/products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment product before making a commitment to purchase the investment product. Past performance is not necessarily indicative of future performance. Any prediction, projection, or forecast on the economy, securities markets or the economic trends of the markets is not necessarily indicative of the future performance. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data.