Sunday 27 November 2011

Personal Finance of a Singaporean Youth

This is a topic particularly close to my heart as I also consider myself a young person.  Like any Kiasu Singaporean, I have always been interested to find out where my fellow Singaporeans stand on the issue of personal finance and how I am doing relative to them.  Why are some of my friends able to invest $100k at such a young age while others are applying personal loans at predatory interest rates? Are we well invested, well protected and well funded for a rainy day?  Having worked as a financial adviser in a local major bank has enabled me to understand young people on a deeper level (their finances), and not just the front they often portray to their social circle.  They are some of my interesting observations about young people and I have summarized them below:


  • Young people frequently queuing outside cash deposit machines usually have the least monies in their bank accounts.
  • Majority of them have more monies in their CPF than they have in their bank accounts. 
  • The more credit cards one have, the most likely they are in debt.

Belief system

Escaping the Rat Race?
  • Young people believe they can become financially independent by investing in property and stock markets.
  • Many aspire to own a private property in district 9 and 10 and live off the rental income for the rest of their lives.
  • Many aspire to be able to retire at age 40 or 45 if finances permit.
  • Many take employment for granted and are optimistic about their economic potential in life. 

My Simple Take...

I got to admit I am guilty of displaying some of the above syndromes in the past so I can understand the thought process of our younger generation.  I’ve always believed money management is perhaps the most important skill young working adults should cultivate.  The age group between ages 23- 39 usually spends on average about $500 - $1500 per month. Given the limited income one earns from a 9 -5 office job, learning to cut expenses and tightening one's belt in these tough economic times is a good habit to cultivate. Very often, it can be more effective than learning how to speculate financial markets and hoping to make a killing. 

We are living in a world where women are willing to spend thousands to buy a LV bag and men (yes! unfortunately even dumber), are willing to buy cars first before buying their first property. Going on at least 1 to 2 overseas trip per year is now considered the “norm”. In addition, we need to change to the latest models of HDTVs, Mac books and Iphones every now and then.  Whenever I check out photo galleries in Facebook, the pictures are usually those of good cuisine taken in a restaurant, pictures taken while travelling overseas or of some expensive activities one is participating in. 

Reaping what we sow
These perks, once enjoyed on a frequent basis become a part of one’s lifestyle and can significantly alter our spending patterns. Like a rubber band, it is easy to stretch and expand it but difficult to bring it back to its original status.   Isn't it ironic that Singaporeans are one of the most well educated people in the world yet we also have one of the highest debt to income level ratios among developed countries?  As financial literacy becomes more widespread in Singapore, ain't we supposed to be more financially competent as well? Perhaps its time to rethink our basics.

Please feel free to comment?