Let’s face it, Singaporeans are just not that good at coming up with goals that haven’t been programmed by society. Other than the whole “degree, job, marriage, HDB” thing, people have surprisingly vague financial goals.
Brenda (not her real name), a 33-year-old bank executive and mother of a two-year-old, does not keep track of her savings and does not invest. She has no idea when she’ll be able to retire, but for now she’s glad she can afford to buy designer bags and clothes with her current salary. She admits she’d have to drastically downsize her lifestyle if she ever got laid off or suffered a pay cut. But for now, she prefers not to think about it.
Brenda’s situation is not uncommon. And such sloppy thinking and poor financial management is part of the reason Singaporeans display such poor levels of retirement adequacy—14% of households have no savings at all.
Of course, everybody wants to be a billionaire. But try to fulfil these more realistic goals first, then we’ll talk.
I will save $X so I can retire at [age]
I get anxiety attacks when I walk around Singapore. The sight of all these wizened old people working in menial job, the fact that they can hardly stand notwithstanding, is a terrible one, and a reminder that in a few decades that could be us.
And recent polls on the retirement readiness of Singaporeans are not encouraging–41% of Singaporeans haven’t put a single cent towards retirement, and we already know that CPF payouts are unlikely to be sufficient when the time comes. A disturbing 2 in 5 Singaporean mothers plan to rely on their children to finance their retirements.
The problem with saving for retirement is that nobody really knows how much they will need, so vaguely “saving for retirement” can seem like throwing an infinite amount of money into a black hole. When you want to buy a car, you know exactly how much you should pay for your desired model, so saving is easier.
The sad truth is there is no single answer as to how much you need for retirement, no teacher who can spoonfeed you with examples from the past year. For once in your life, you’ll need to make up your own mind.
Check out this article elsewhere on MoneySmart to get a better idea of how to estimate how much you’ll need to retire.
I will find a way to obtain an income of at least $X a month without working more than X hours a week
According to a recent report, as many as 83% of Singaporeans aren’t satisfied with their salaries.
Instead of sitting around complaining about your boss all day long, make it a priority to increase your income if you’re not happy with it, like this guy did.
Of course, when you’re already working 12 hours a day in your current job, taking on a second job could be a surefire way to end up in the hospital.
The trick is to aim to find ways to increase your income while still working a humane number of hours per day.
While careers like investment banking tend to offer the highest salaries, employees are often stuck at the office until 3am and even pull all-nighters. Can you imagine working an 80-100 hour week? Yup, I can’t either.
You need to be realistic about the number of hours you can physically handle and are willing to work, and then try to achieve your income goals without exceeding them. For instance, a friend of mine used to work as an engineer, but found that he was working close to 70 hours a week and still wasn’t reaching his income goals. He could have taken on a second job, but the hours would have killed him. Instead, he quit to become a full time tutor, and now earns three to four times his previous salary, while working half the number of hours.
For many people who find they can’t survive on their current salaries, the answer might be to upgrade their skills so they can take on more responsibilities, change jobs in order to get a pay increase or do freelance work on the side.
Just make sure you define the parameters of the amount of income you want and the amount of time you’re willing to put in, so you know what to work towards.
I will increase my net worth to $X by the end of the year
Just because you have a collection of Chanel bags doesn’t mean you are a high net worth individual, unless you mean that other kind of ‘high’.
Your net worth is basically the sum of all your financial assets (savings, property, investments), minus the sum of all your financial liabilities (unpaid loans).
As you can see, having a wardrobe that would induce jealousy in any self-proclaimed Instagram fashionista or a very flashy car does not actually increase your net worth. If anything, your net worth falls because you have to spend money on these liabilities.
You can also have a high salary but a low net worth if you end up spending all your money on booze and online shopping.
If you’re still paying off a housing loan, the more of your debt you pay off, the more your net worth rises.
When your investments bear fruit or you save more money, your net worth rises.
Since we’re just stepping into 2016 and all, now is a good time to set a goal to increase your net worth by a certain amount this year. Grow your money, not your wardrobe!
What money goals have you made for this year? Tell us in the comments!