At 30 Years Old, Your Monthly Salary Should Have Been S$2,600 For You To Feel Financially Secure.

Earlier today, Mr Budget was having a lunch catch up with a friend. Obviously we spoke about marriage and the topic of money came up in our discussion. 

While we went talking, I can’t help but sense that she is worried generally about her financial situation. As she approached 30 years old, she has not settled down with her partner mostly due to financial insecurity.

According to a recent report, over the decade, Singaporeans who are getting married for the first time are getting older

The median age of first-time grooms was 30.2 last year, slightly older than 29.8 in 2008. For first-time brides, the median age was 28.5 last year, compared with 27.3 in 2008.

So I asked myself, at age 30, how much should you have saved up in order for you to feel like you are ready for the next phase in life? Is money a big factor in deciding whether to tie the knot?

Mr Budget did a quick scenario planning to find the monthly salary indicator to check when will someone feel “safe” to move on their next phase in life:

For simpler calculation, we made the following assumption:

  1. A couple will need to save up S$20,000 in total for the cost of the first child. This includes basic government hospitalisation, as well as the various basic cost for after the kid is born up till the first year. You can read my previous post on this.
  2. Wedding will cost S$20,000. This assumes that banquet can cover itself, and the couple will need to fork up expenses such as photography, wedding gown package, guodali, honeymoon. This is a general assumption and varies according to each couple. 
  3. Renovation will cost S$40,000. This is a general assumption and seems to be a fairly accurate estimate. We spent about S$25,000 because our home comes almost fully furnished.
  4. Assume first house will be covered by CPF and some help from parents for easier calculation. 

Hence the total needed for someone to “adult” and get married at 30 years old, it turns out to be S$80,000 per couple, or S$40,000 per person.

Let’s make a further assumption that people only start saving when they turn 26. This is because the savings rate for Singaporean in their first few years of career will usually be quite low, or that they may have student loans to clear in the first few years.

To save up S$40,000 in 5 years (26 to 30 years old) before turning 30 years old, he or she will need to save S$8,000 annually, or S$666.67 a month. 

Assuming he or she allocates S$1500 for living expenses (food, entertainment, roof over the head, transport, social commitment), that will translate to a total take home salary of S$2166.67, or a gross salary of S$2,600 (to take consideration of CPF).

Also Read: Our Retirement Expenses

So I would think that if someone, at age 26 years old, is making S$2,600 in monthly gross salary, he or she might start to feel anxious about life. 

The good thing is that, according to a recent report, the median salary for Singaporean is now above S$4500. 

But for those that are making S$2,600 or less, I would think the option now is to upskill, and see if there are better career opportunities in other companies. 

Don’t give up because there are so much more joy in life and everything will always be ok. Mr Budget started off with S$2,200 in gross salary about 6 or 7 years ago. 

How much was your gross salary when you started working?

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Why You Should Never Pay For Credit Card Annual Fees

Earlier this month, while Mr Budget routinely checks his credit card transaction, he realised that Standard Chartered has charged him the annual fee for the usage of the Standard Chartered Unlimited Cashback card. 

The total amount charged was S$192.60. 

If you do the math, you will realize that the amount is actually quite a huge amount.

Some background: Standard Chartered Unlimited Cash Back card is a no frills card that gives you a flat 1.5% cash back with no minimum spend, and there is no cap on the monthly cash back. So it is a pretty useful card if you have big purchases. 

To get a cash back of S$192.60, you will need to spend a total of S$3,852.

Splitting that into 12 months that will be a minimum monthly spent of S$321! 

What this means is that, if you are paying for the annual fee, and if over the past 12 preceding month, if you did not spend a minimum of S$321 on the card monthly to get the cash back, you will actually lose money for using the cash back card! 

So it makes absolutely no sense to pay for the annual fee, because you can easily go for other cash back cards option (eg the AMEX True Cashback card which essentially does the same thing). 

Being the stingy Mr Budget, he wrote in to request for a fee waiver. 

Of course, Standard Chartered replied with the following response: 

Apparently, there are no options for an online fee waiver request, and you have to do a phone waiver request. 

To my delight, the phone waiver fee request is actually very very simple, and upon keying in the credit card number, I received an instant confirmation of the fee waiver.

Earlier this year too, we had a similar experience with our DBS Live Fresh Card, where we requested for a fee waiver. Unlike Standard Chartered, you can request for a fee waiver digitally in just a few buttons. 

Here’s how it looks: 

Needless to say, the Live Fresh card annual fee was also waived earlier this year.

As shared in our previous article, it is probably a good time to do your credit card review as the year comes to an end to see if there are any unexpected charges, or if your credit card strategy can still be further optimised. 🙂 

Read: 7 Things To Check On Our Financial Check List Before The Year 2019 Ends

If your bank is charging you an annual fee and reject your fee waiver request, you should definitely swap out to another bank, because it makes little money sense to be paying for credit card annual fees (excluding the high banking tier credit cards). I’m sure most banks waive off their credit card fees nowadays to users with high credit score.

Which is why regular checking on your personal finances will allow you to identify financial gaps like this.

Also, since we are talking about credit cards, we’d be interested to know which is your primary credit card and what are you using it for.

Do let us know in the comments below! For us, it will be the UOB One Card, DBS Live Fresh, and then the Standard Chartered Unlimited Cashback Card!

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October 2019 Monthly Expenses Update

At the end of every month, Mrs Budget and I will reconcile our monthly expenses and see what are we spending on, and where we can optimise or cut down our expenses.

We subscribe to the believe that every penny saved is a penny earned – sometimes its easier to save S$100, than to earn S$100, both of which results in the same net worth increase.

In October, here’s what Mr Budget spent on.

Meals $556.04
Transportation $85.00
Entertainment $198.00
Groceries / Home $778.8
Shopping / Cloths $61.00
Phone Bill $56.10
Insurance $1,635.16
Income Tax $103.05
Hair Cut $34.00
Digital Subs $30.56
Malaysia Mortgage 1 $880.13
Malaysia Mortgage 2 $123.38
Singapore Mortgage $985.74
Travel $141.00
Others $5,319.00

My total expenses this month is at S$10916.52, a high side from my normal benchmark. This consist of S$3848.13 of fixed expenses and $7,068.39 of variable expenses.

The variable expenses is slightly high because of the renewal of my annual term insurance, a one of wedding expense of S$5,000, a one off angpao S$500 to my mum for travel expenses, a one off home projector purchase of S$128.

What I also realised is that my dining cost is slightly on the high side this month, due to over reliance on Grabfood. Making a mental note to reduce dining expenditure for the next few months.

Mortgage payment also makes up almost S$2000 of my monthly expenses, and will only continue to increase the next few years. With one of the condo almost done in the next few months, will need to see if we can start finding tenant or sell off the property so that we can reduce some cash flow stress.

For Mrs Budget, here’s what she spent on.

Meals $205.10
Transportation $104.50
Family $600.00
Entertainment $105.93
Groceries / Home $778.83
Phone Bill $39.71
Endowment $303.97
Insurance $87.25
Shopping $2.40
Gifts (Wedding Festives) $70.00

Mrs Budget’s total expenditure is $2,303.11, out of which $1,340.53 is fixed expenses. Other than the monthly contribution to the family and endowment plan, Mrs Budget’s spending is well within our satisfaction.

What is not in our satisfaction is the high expenses of Mr Budget – hopefully we can reduce the dining expenditure, entertainment expenditure, home groceries, as well as restructuring one of the Malaysia condo mortgage – either through selling off, or renting it out after TOP in a few months.

Will see how it goes. 🙂

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Also Read: What Have We Done This Month Towards Our Financial Goals – October 2019

Our Retirement Expenses

Earlier this year, Straits Times published a report that generated much discussion with regards to the amount needed for a basic standard of living.

According to the report, a couple aged 65 and above would need $2,351 to cover their day to day expenses. 

Here’s how the team from NUS defined a basic standard of living:

A basic standard of living in Singapore is about, but more than just, housing, food, and clothing. It is about having opportunities to education, employment, and work-life balance, as well as access to healthcare. It enables a sense of belonging, respect, security, and independence. It also includes choices to participate in social activities, and the freedom to engage in one’s cultural and religious practices.

Here’s what the results found:

Source: whatsenoughsg

The line items are surprisingly very all encompassing. 

As part of our retirement planning, we charted out how much we’d need to build our retirement portfolio based on our projected annual expenses, and compare that to the findings.

For both Mrs Budget and myself now, here’s our current rough fixed expenses. We excluded other variable expenses such as mortgage, income tax, digital subscriptions out for now.

MealsS$700
TransportationS$200
Groceries / HouseholdS$200
Phone Bills S$100
UtilitiesS$200
GroomingS$50
EntertainmentS$200
Provision for:
insurance
personal care
Health care
Others
S$1000
TotalS$2,630

Pretty close to the study results of S$2350.76 per elderly couple.

So in total, we will need S$2630 a month, or S$31,560 annually in order to maintain our current standard of living. This is of course assuming we have no other liabilities (mortgage, loans, credit cards etc) and our dependents are taking care of themselves.

Assuming we account for inflation, here’s what S$31,560 of annual expenses will look like for the next 50 years:

Inflation rate of 2.57%. Source: Trading Economy

It is quite scary to know that S$31,560 of annual expenses now will be S$112,241.84 (S$9,353 per month) 50 years later!

Of course, the inflation rate we are using is of the higher end – 2.57%. If we were to use 2019’s inflation rate of 1.4%, the numbers will look way lower. However, there are studies that say that experts expects inflation to go up to 3.2% in the coming years, giving us reason to be alarmed and to use the historical 60 years inflation average.

So for our retirement planning purposes, we will be using the above table of expenses to do our planning and to see if we have enough to retire.

Of course, this figure is also the basis of all our calculation when we plan for our short, mid and long term goal. 🙂