How often has the thought, “Do I spend too much?” crossed your mind? Well, join the legion of twenty-somethings who can empathise.
How often has the thought, “Do I spend too much?” crossed your mind? Well, join the legion of twenty-somethings who can empathise.
Let’s be real – while we all know we should keep a detailed record of our spending, very few of us do so. In any case, a poll commissioned by the American Institute of CPAs with the Ad Council discovered that three quarters of young adults base their financial habits off those of their close friends – which means if your friend tends to spend beyond what she makes, you could be in danger of doing the same.
This may be due to the need to keep up with our peers in terms of lifestyle and eating at fancy restaurants – after all, living an aesthetically pleasing life isn’t cheap.
Money can be a taboo topic, but it’s something that needs to be talked about. Having a benchmark figure can be useful when tracking spending patterns as it highlights when you’ve fallen into a habit of overspending.
To illustrate this, we chose three women who vary in terms of industries and living situations, got them to estimate how much they would spend over a weekend, then added up their totals to see how well they kept to their budgets.
Marie C., 21
Industry: NGO
Position: Customer Care Officer
Monthly Salary: $1K to $2K
Marie C. is Singaporean but studied in Canada before returning here to work. She lives at home, where her parents take care of the rent, groceries and utilities. She works at an NGO because she wants to improve the lives of domestic helpers. She finds her job fulfilling and also enjoys reading, eating, and discovering new vegan restaurants around Singapore.
Saturday
Morning
I start my morning with an orange and carrot juice ($6), and take a bus down to Orchard ($0.42) to do some shopping.
Afternoon
I’m looking for work clothes and am determined not to get sidetracked. I manage to find a nice pair of pants at Uniqlo for $49.95 and leave town before I get distracted. I take the bus home ($0.42).
Evening
My mum cooks some delicious vegan curry for dinner, and for dessert, I finish a tub of sorbet from the freezer. I head to my room and read a book until I fall asleep.
Thursday (day-off in lieu of Sunday)
Morning
Sundays are actually the busiest day at work because it’s the day off for domestic helpers and we need to be in the office to assist them. Given this, the office has a rotating scheme of weekdays off in lieu of Sunday – this week, I have Thursday off. I eat breakfast at home, which costs me nothing (perks of living with your parents!).
Afternoon
I take the MRT to Farrer Park ($1.16) and meet my friend for lunch at a vegan place we’ve been wanting to try. We order two mains to share and two drinks – the bill comes to $12.30 each. We’re both craving donuts, so we take the MRT to a vegan cafe in Chinatown ($0.87). They don’t have donuts that day, so we settle for juice instead (tip: passion fruit and lime is a surprisingly good combination), which costs $4.50. We part ways and I take the MRT home ($1.23).
Evening
I spend the evening unwinding with a glass of wine and a nice book. I eat dinner with the family, and head to bed early.
Amount over budget: $26.85
Marie C. says: While I went over what I thought I would spend, I don’t feel bad about buying the pants because I needed them for work. I estimated I would spend $50 because it’s the amount of “extra” money I can spend comfortably in the context of my salary. I think it accounts for the occasional overspend – like the jeans – or if I decide to dine out or watch a movie. On most weekends, I spend less than $50, so when I go over once in a while, I don’t mind. If not for the jeans, I would have only spent $27 in total, which isn’t bad at all.
Saturday
Sunday
Amount over budget: $63.94
Marie D. says: When I go over budget, it usually stresses me out just as I make the payment! But after some reflection, I realise it’s not so bad and I’m still within my overall monthly budget. As long as I still have enough for my savings and the rest of the month, [I’m OK]. Since I spent so much this weekend, I’ll go to a park next weekend or hang out at home – places that don’t require spending. I feel the pain of overspending now, but it will disappear next weekend when I come in under budget.
Saturday
Sunday
Spending differences
If you’re living at home with your family, you’ll save a lot on rent, utilities and food. Eating at home for a week costs Marie D. upwards of $50, whereas eating at home for Marie C. and Shann costs them nothing. It didn’t occur to Shann and Marie D. to include the cost of public transportation, but Marie C. remembered. This might be because, unlike the other two, Marie C. has only just started working, and so spending on transport is probably still at the forefront of her budgeting. What’s more, Marie D., the only expat, breaks down the price of food at home because she has to pay for it, while the other two don’t as they live with their parents.
Despite living at home, the two locals, Shann and Marie C., spent around 20 percent of their salary on the weekend, compared to Marie D., who is completely financially independent and spent about 16 percent of hers.
Shann said she goes over budget because she can’t keep up with the cost of living here, yet she makes the most out of the three girls. She highlights something significant: working in a higher income industry means having wealthier peers. This probably means that she patronises pricier restaurants, cafes and bars, and spends on more expensive clothes. She also has a gym membership, which is a monthly cost of about $170.
Money matters
Most people keep track of monthly liabilities like rent and utility bills, but day-to-day tracking can be a buzzkill. Who hasn’t tried a budgeting app only to shut it down and never look at it again?
If you lack the discipline to track your spending but still want to be in control of your finances, Andre, a relationship manager at a local bank, suggests having two separate bank accounts, one for saving and one for spending. He purposely keeps very little money in his spending account. “Whenever I check the balance and see how little money I have, I automatically self-regulate my spending.”
While we all have different incomes and levels of responsibility (let’s not forget lots of people live at home but also contribute money to their parents), what’s important is to think “save before spend”, especially if you have plans to buy a big ticket item like a house, for example. “Money should always be set aside to savings before spending,” says Andre. “This can range between 10 to 30 percent of your income, and it should be moved to another bank account that is less accessible so you won’t be tempted to touch it.”
Creating a budget that won’t budge
1 Set aside funds for liabilities and other common monthly payments.
2 Set a loose budget for workday meals and stick to it.
3 Allocate the leftover funds to different categories (like food, shopping and entertainment) for the month. If you know you have a big weekend of fun coming up, be honest with how much you will be spending and set aside more funds for it, then adjust the rest of your budget accordingly.
4 Go digital. Make use of your bank’s mobile app to help you keep track of spending when you’re on-the-go.
Images 123RF.com Text Complied By Claire Soong.
