Do you know where you stand among fellow Singaporeans in terms of household income?
Now, go on and sum up the income of all the income earners in your household, does it give you more than S$8,846 per month? If it does, congratulations, you are better off than 50% of Singaporean household! But, have you ever compared your income to Singapore’s cost of living?
- At least 20% of Singaporeans are earning less than their monthly expenditure 🙁
- Singaporean’s households spend an average of S$4,839 per month.
- Two ways to do better for household finances: Pegging your expenses in the various category to Singaporean’s household average, and finding the right investment.
Further Reading: Singaporean’s household spending
- Household expenditure of Singaporeans differs with age, with the age range of 30-39 years old spending the most.
- Based on the Household Expenditure Survey done in year 2012/13, Singaporeans spend an average of S$4,724 per month.
- That includes day-to-day expenses on items such as food, bus/MRT fares and clothing. Regular expenditure such as utilities, phone bills and school fees, as well as items such as holidays and hospitalisation bills are included too.
- Household spending now should be around S$4,839 due to inflation.
The Scary Truth – At least 20% of Singaporeans are earning less than their monthly expenditure
Statistically, median household income after CPF contribution exceeds monthly household spending. appears that Singaporeans are doing well.
It may appear that Singaporeans are doing well, but breaking this down even further, here’s what we realised:
- The lower 20% earners in Singapore’s income is less than their monthly expenditure.
- The difference in monthly household expenditure between the top 20% earners and the bottom 20% is about S$5,467.
- For the higher income, their monthly expenditure is not even 1/3 of their monthly household income, which means they will only get richer with each passing month.
The lower 20% Singaporean earners face a high chance of getting stuck in this cycle with no extra cash to pull themselves out of the poverty cycle. Their never-ending cycle with debt will only add on to their financial burden each money. This is how real Singapore’s poverty situation can get for the lower income.
As for Singaporeans households that are on the 41st – 60th quintile and above, their income sits on a very comfortable level.
- 41st – 60th quintile: Income exceeds expenditure by S$3,768
- 61st – 80th quintile: Income exceeds expenditure by S$6,842
- Above 80th quintile: Income exceeds expenditure by S$17,389
This further enhances the point that the rich will only get richer.
How we can do better – breaking that usual cycle?
- If you find your household spending more than the average, maybe it’s time to watch your expenses.
- Two ways Singaporean are stretching their household expenditure: spending on necessary item (expenditure fats) and spending on a wrong investment product
Breaking down our expenses: In search of household expenditure fats
The most immediate way to getting better with our household expenditure is to get rid of our expenditure fats. Below is a quick overview of average monthly household expenditure according to age range.
|<30 years old||30-39 years old||40-49 years old||50-59 years old||>60 years old|
|Housing related expenses||$830||$888||$761||$595||$552|
|Clothes & Foorwear||$140||$194||$175||$164||$103|
|Others (eg. Cigarettes, beer, manicure)||$513||$824||$808||$698||$505|
If we translate the above information into bar charts, we noticed that the 3 main categories Singaporeans of all ages spend on are:
Other than health, education and housing which might be subjective, one can take a look at the rest of his expenditure in terms of category every month to find out which area is he spending too much on.
Two ways to track your expenses effectively:
- A mobile expense tracking app (there are some free one on app store)
- A detailed excel sheet
Getting the right investment product that suits you
Your paycheque and savings account can only get you so far. Choosing the right investments should always be at the back of your mind.
- 13% of the insurance products sold in the first half of the year 2016 were investment-linked products. Out of which, some of these subscribers might be better off investing in the Singapore Savings Bond (SSB) should proper advice be given.
- A percentage of Singaporeans might also be investing or trading instruments which they are not familiar with. While there’s no hard and fast rule to this, it is always good to read up more. Financial blogs content which is not sponsored will be a good way to start.