Financial Freedom? You really need to read this.

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How much money to retire in Singapore?

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The question is not how much but rather “how to?”. In Singapore, lifestyle standards and demand for quality health is always on the rise. Basic necessities to high end luxury lifestyle items increase in price is growing at a faster rate than one can imagine.

Before saving what are the pre-requisites?

A standard normal equation would be monthly income minus monthly expenses.
I beg to disagree. Unforeseen circumstances might affect the final figure greatly. This could ranging from having a habit of buying a drink everyday after work, events like birthdays or weddings to attend and also life emergencies where one would need to pay high medical bills

Let’s look at the basic equation of monthly income minus monthly expense.

Let’s say you make SGD$2000 per month working at Raffles Place.

You stay at the Jurong East.

After CPF, you’re left with $1600. Taking train to work will cost $1.54 one way and $3.08 two way.

$3.08 multiple by 20 work days = transport cost of $61.60

Make your own breakfast

Box of cereal $3.20+ Milk $2.10 = 7 breakfast * 4 = $21.20

Lunch at work go to the cheapest hawker $5* 20 work days = $100

At this point you will left with $1417.20

Phone bills $50

Dinner average $4 at jurong area * 20 work days =$80

Utilities $200

Internet subscription $39

At this point you will left with $1048.20 before counting Saturday and Sundays.

Let’s say you were to cook every Saturday and Sunday for all 3 meals, going to the supermarket will only cost about $20 or less for simple meals enough for 6 meals.

$20 per weekend * 4 = $80

You will be left with $968.20.

If you decide to live life simple without going out and enjoying with friends you could save this amount but it’s not possible…

Going out with friends for a drink or dinner regularly will easily deduct this amount by 50%. Basically this is a personal choice. Drinking alcohol is not cheap in Singapore.

You will be left with $484.10.

How much can i save in a year?

Figure A. If you decide to spend the 50% mention earlier= $5809.20

Figure B. If you decide to save the 50% mention earlier = $11618.40

How much can i save in 10 years?

Let’s say you get half month bonus yearly and an increment of 5% salary yearly.

Figure C= $5809 + half month bonus + 5% = $6899.45

Calculation base on Figure C.

Year Year Deposits Year Interest Total Deposits Total Interest Balance

Year Year Deposits Year Interest Total Deposits Total Interest Balance
1 $6,609.20 $519.90 $13,218.40 $519.90 $13,738.30
2 $6,609.20 $884.64 $19,827.60 $1,404.54 $21,232.14
3 $6,609.20 $1,268.04 $26,436.80 $2,672.58 $29,109.38
4 $6,609.20 $1,671.05 $33,046.00 $4,343.63 $37,389.63
5 $6,609.20 $2,094.69 $39,655.20 $6,438.32 $46,093.52
6 $6,609.20 $2,539.99 $46,264.40 $8,978.32 $55,242.72
7 $6,609.20 $3,008.08 $52,873.60 $11,986.40 $64,860.00
8 $6,609.20 $3,500.12 $59,482.80 $15,486.53 $74,969.33
9 $6,609.20 $4,017.34 $66,092.00 $19,503.86 $85,595.86
10 $6,609.20 $4,561.01 $72,701.20 $24,064.87 $96,766.07
Now let’s look at unforeseen expenditures.

You got sick on a work day and require a hospital visit. But the illness you have might not be fully eligible to cover using your’re your medisave to pay for your medical bills.
We will use the figure of saving $10,000 a year to calculate.

Giving birth: At least $5,000
Falling Down and needing a knee repair: $8,000
Falling sick and MC thrice a year : $150

How about medication fee? uh-oh. Almost all the savings could be gone. But most would think that they wont be that unlucky. That is why i call this unforeseen financial expenditure.

What should I do?

There is this method I came up with known as PAH. Prepare for unforeseen emergencies, account for social events and habitual behaviour.

Let’s use the previous income and expenses equation to calculate and see how we can apply PAH method to have overall control of personal finances. I’m not suggesting financial freedom because this relies greatly on personal discipline to really control you’re personal behavior.

Prepare For Unforeseen Emergencies

You might already know the answer for this. The answer is getting a insurance plan. Health insurance come in many forms, I might not be the subject expert to explain about different kinds of insurance. But I sure can explain the importance of insurance. Many might think they getting an insurance is just an additional cost and less money to save per month. Medical insurance comes in many forms which provide from minimal coverage to premium coverage, of course this would differ from different prices.

Why if I can only afford a low end health plan?

My verdict is getting a cheap insurance plan is still better than having no insurance plan. Minimal coverage is better than no coverage. Most would not even entertain insurance agents or insurance event booths. The question is are you financially prepared to pay for a surgery or a treatment procedure that might cost thousands of dollars? If you cant afford a basic insurance plan, then its time to upgrade your skills or find a better job to increase your salary. Alternatively, you can..(Refer to Habitual behavior).

Account for Social Events

Most of us understand that entertaining friends is somehow a inescapable request. But one must always set the priority between Money and Lifestyle. I cant tell you to avoid all your friends hide at home and save up all the money, this is completely wrong.

The correct way to balance is by calculating the benefits and return of bonding and building a relationship.

Friend A always ask you for money because he needs them for his unhealthy lifestyle choices.

Your ROI (return of investment for this friend would be probably next to nothing).

But again, will this friend be successful in the future and provide you with different routes to business or career opportunities? The answer is YOU. You have to be the one to decide who are good or bad. There is no proper all 100% proof course in this world that can help you identify who would be successful or not. This have to go by experience, one might fail to recognize a good or bad friend in life. But along the way in the future it will be easy to identify.

Am i asking you weight your friends on a weighting scale and money?

Again  the answer is no. You have to make your own choice.

 

Habitual Behavior

One should always adjust his lifestyle base on possible financial stability and not because of following what other’s do.

Example: My friend has 10 branded bags, i should not lose out. I should also get some branded stuff

It will completely make no sense if one would follow other examples just based on pride. To be honest, how much is pride worth? How much is 1g of pride worth? This is a human weakness where one follow have to follow others to be part of a gang or status. Im not saying a person should live his or her live without pride. What im saying is…..

There is only one fine line between pride and being stupid – Singapore uncensored.

The verdict spend in what your capable of not what other’s are capable of. Prioritize is “need” rather than “want”. Know where you stand and plan for your life in your own way. Not what others tell you!

Thank you for reading!

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