I have read a chinese article and decided to translate it. I have added some juices to it.
"
Money not enough" is common phrase among Singaporeans. There is even a local popular local firm named after it by Jack Neo. Seriously, why does people always say that? From my personal view, there basically 5 reasons.
1) Overstretching housing loan90% of Singaporeans owns their own house in which 80% of them have HDB or EC flats. This is a compliment to the Singapore government efficiency in implementing "Everyone has a house" and "Buying house using CPF" policies. If you rent a house, you need to use CASH but if you are buying your own house, CPF comes in handy. For the same reason of using the "invisible" CPF, a lot of people don't really have proper budgeting. According to experts, your monthly installment should not exceed 35% of your total income. For instance, if you are earning $5000 monthly, the maximum installment works out to be $1750. Instead of adhering to the 35% taboo, a lot of people overstretch to 50% or more, especially given the soaring home prices. In the end, these people only have 50% to spend on personal expenses, children, insurance, their education and their saving. According to a survey by
Oxford University Institute of Ageing, 90% of Singaporeans thinks they are not ready for retirement in terms of financial. The government just raise the retirement age to 75. How many of you still want to work when you have reach that age? This is the man Achilles heel for Singaporean's plight of money not enough.
2) High Car Maintenance1 out of 3 Singaporeans owns a car. More Singaporeans are buying car because of faltering COE prices previously. Figures from LTA shows that the percentage of public transport users drop from 63% in 2004 to 59% in 2008. Frankly, accessibility in Singapore is almost perfect and since it is such a small country, there's little reason to get a car. Of course, a lot of people buy car just to show off their STATUS. Millionaire JIM ROGERS who migrated to Singapore doesn't owe a car.
Desipite this, a lot of people who is earning less than $5000 monthly can't resist buying a car even if it means sacrificing their meals. You must look beyond the monthly installment before you commit to buy a car. On an average, you need $1500 monthly to maintain a normal car. This work out to be 30% of your income. On the other hand, let's say you spend $700 on public transport and taxi, you can save $800 for RETIREMENT. There a research in YAHOO news recently stating if your total family income must be at least $7650 to owe a car comfortably.
3) Earn More Spend More If I ask you "Are you earning more now as compared to 5 years back?". Most likely your answer will be a yes. But if I ask you "Are you saving more now as compared to 5 years back?. Most people would think hard. Why?
Most people will alevate their standard of living once their income increases. (e.g changing bigger house, newer handphones, cars, etc...). If you don't kill this bad habit, even if you are earning 10 times your income now, you will still be complaining "Money not Enough". ADAM KHOO says that it is not the amount you earn that matters but is the CASH FLOW.
CASH FLOW = INCOME - EXPENSES + OTHER PASSIVE INCOMES/INVESTMENTS/BUSINESSDo not envy those
just-achieved-some-success people who die die want to have big houses and cars. They do not own all theses but the BANK does. Infact, they are only around 6 paychecks from being bankrupt. Sound familiar? Not to worry, start rectifying the equation by increasing the
CASH FLOW and reducing the
EXPENSES portion.
4) NO REGULAR SAVINGSIf I ask you "Do you have savings?". Most people will say yes. That's good but HOW MUCH? If you can't answer that question, it mean you need to set aside $ first before you spend. For instance, transfer $300 to another account before you spend the rest. To plan the amount you can save, you must first keep track of what you spend monthly. Start tracking you expenses on a daily basis. You can use an EXCEL worksheet to do that. Personally, I use a self-written program for these purpose. If you are interested, you can email me and i will install for you for minimal charges.
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Don't save whatever that is left after you have paid all your bills.
Another good method is to save all your year end bonuses.If you don't have saving, you can't afford not to work or become seriously ill.
Life insurance and Hospital plan should be there in case you can't work or end up in hospital.
5) Do not know how to make money using money
Many people shun off from investment or trading because they lost $ on it. Most opt to put their money in the bank. In fact, they are losing money without they knowing it. Current fixed bank interest stand at around 1%. with inflation at around 3%. They are making a loss of 2% per annum. Even if you don't know how to start, just buy some REITS that pays 5-6% per annum. For more recommendations, you can give me a note on my chat box on the right hand side.
Note that to invest, you need to fulfil the criteria of point 4. If you have no or little savings, you can't do anything.
