Monday Musings #5: Living Within Your Means

Income inequality is here to stay. There will always be the super-rich, the rich, the well-to-do, the average plodding Joe, the low-salaried worker living from paycheck to paycheck, and the poor relying on charity. The question is: How can we build up enough savings for retirement, regardless of how much we’re earning?

It’s clear that many Singaporeans don’t live within their means. It’s all too easy to get credit cards in Singapore, and many are unable to resist the temptation of spending money that they haven’t earned. I know because I’ve been through that. For my first two years of working life, I had credit card debt from indulging in more holidays, expensive dining, and shopping than I could afford. When I finally wised up, it took me a year to pay off everything. I then became a lot more disciplined about saving, and now I have enough saved up to sleep well at night.

I blame peer pressure and consumerism for the phenomenon of overspending in Singapore. Many Singaporeans feel that they need to have status symbols like a branded watch, and when they see their peers jetting off frequently for holidays, they don’t want to lose out. They want to brag about having been to Paris or Japan too, and tote limited edition branded bags. They don’t think twice about dining at restaurants every day, while in the past our parents would have gone to a restaurant only to celebrate a special occasion.

How can the average Singaporean afford all this? If they’re earning less than $5,000 a month, the answer is that they can’t. By putting their purchases on their credit cards and delaying full payment, many people incur interest charges and late penalty charges that snowball into debt many times bigger than their monthly salary. To make matters worse, the high cost of living in Singapore is crippling. In order to buy a car and an HDB unit, many people sink even deeper into debt by paying a small sum upfront and taking up loans with high monthly payments.

The only way to be financially safe is to live within your means. I don’t understand how some women can splurge on $5,000 bags on a $2,500 monthly salary. Can you justify paying two months’ salary for a bag? If all that money is going into buying a bag, there certainly won’t be enough money left over for food. We’ve all heard stories or know of people who scrimp and save on food in order to spend on big ticket items – that can’t be healthy, right?

The only way to live within your means is to know what you can afford to spend and prioritise what you want to spend on. We all have to make choices when our resources are limited. For myself, my main indulgence is travel. I don’t shop much, and I only have one day off each week, so I may spend a little more on food and a movie on that day, but I don’t spend much on a normal day. Okay, my minor indulgence is my hair, but I do get a discounted rate so I don’t spend that much on it overall.

Can you imagine what state my finances would be in if I didn’t just splurge on travel and my hair, but also on fine dining, nails (I do my own nails so it’s entirely free), skincare (I haven’t done a facial in years), shopping, and the latest gadgets (NO I am not buying the iPhone 5C or 5S) etc?

Spending on travel and my hair, and enjoying my one day off a week with my fiance gives me enough happiness. I know I have to work hard now so that I can channel as much of my money as possible back into growing my business… and then I can enjoy the fruits of my labour in due time. Being content with simple pleasures and limited indulgences right now gives me peace of mind, knowing that I’m debt-free and financially sound, and making good decisions for my future.

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