Why Are Gen Y Singaporeans Saving So Little Despite Not Having to Pay Rent?

why are gen y singaporeans not saving money

Sure, a house costs a ton of money in Singapore—but so does a Ferrari. Neither affects you at this point if you’re still living with mum and dad. And that’s what most unmarried Singaporeans continue to do. Unmarried people in the 18-30 age group are overwhelmingly likely to still be living at home, and that means the enormous financial burden of having to pay rent is lifted from their shoulders.

But still, many surveys have revealed that Gen Y-ers in Singapore have dismally low levels of savings. Where is all that money going, then?

1. High levels of discretionary spending

If you don’t have to pay rent, other than groceries, utilities and your cellphone bill, most of your other spending is discretionary spending—you spend on things you don’t really need, but which you can afford, so why not?

And based on the high levels of discretionary spending many Gen Y Singaporeans engage in, they’d better be having a whole lot of fun.

People are going to protest and say that the money is never enough in Singapore, blah blah. But take a look around and count how many people you see with the latest iPhone and iPad and you’ll see that young people do have a lot of money with which to do as they please.

The problem is that when given “discretion”, you need to use your brain to make the most of your choice.

Unfortunately, many people leave their brains at home and let advertising make their decisions for them.

What do you get? People who spend unconsciously, waking up in a daze to find themselves surrounded by shopping bags filled with Hello Kitty memorabilia, ironic iPhone cases and winter accessories for a holiday they have no plans to go on.

Kim, a 30-year-old marketing executive, knowingly spends more than she earns every month shopping on websites like ASOS and Taobao. She used to earn more but recently took a pay cut and now dips into her savings to fund her shopping expenses. Kim, who is married but lives with her parents, does worry sometimes about her financial situation. “My husband has a lot of career potential and in a few years’ time I think he will be earning more than $15,000 a month. So I don’t want to make my already stressful life miserable by trying to save a bit of money that can make me happier if I spend it.”

For Marissa, a 30-year-old bank executive, travel is her poison of choice, and she makes overseas trips at least once a month for leisure, whether to shop in Seoul, go on a foodie’s pilgrimage to Malacca or explore Japan. Often, she takes only one or two days off work and flies over the weekend, paying higher ticket prices in the process. Each trip costs at least $1,000. “Don’t ask me to slum it in backpackers’ hostels,” she says apologetically. “I’m too old for that; I need to enjoy good food and a nice hotel when I travel.”

What to do? To be fair, many Gen Y-ers are starting to make more conscious spending decisions, which is also why there are people who actually read personal finance blogs (like ours!). For the rest, waking up is the first step.

2. Trying to buy time and convenience

While the young Singaporean worker might have enough money to treat himself to a nice meal without having to worry about being evicted by an angry landlord, one thing many don’t have is TIME. Not the magazine, but the kind that can’t be bought. Now that bosses expect them to read emails they send at 11pm and clients can hunt them down on Whatsapp, young workers have less and less time to themselves.

Long hours at the office and a tedious commute can eat up the better part of the day, and I’ve noticed that many of the people around me think nothing of spending an extra $20 on a taxi in the interests of saving time.

In fact, this lack of time is costing young people a whole lot more than they think. Here are some ways the average Gen Y-er spends money to buy time:

  • taking taxis to save time
  • eating out because they can’t make it home in time for dinner
  • buying coffee to stay awake because they didn’t get enough beauty sleep

Marissa is no stranger to spending for convenience, and often takes a cab home from her office at Shenton Way to her home in Choa Chu Kang, spending around $20 each time. She works long hours, and the prospect of catching a bus and making the ponderous 1.5 hour journey home is too tiring when she knocks off, often after 9 or 10 pm.

What to do? Poor time management is often at the root of this problem. You need to anticipate unnecessary expenses and make it a priority to avoid them. For example, if you forsee yourself leaving work late, pack dinner the night before to bring to work and print hard copies of some of your work documents so you can leave work a bit earlier and read them on your way home, instead of eating out and then catching a cab back late at night.

3. Expensive socialising

What do 20- and 30-somethings who don’t have to run home to change diapers do in their spare time? Without a family network to consume their time, most people in this age group consider socialising and spending time with friends an important part of their lives.

You don’t need me to tell you the cost of food and drink in Singapore is rising. I’m not just talking about hawker centre food prices or the cost of canned drinks at supermarkets, okay? Sure, ingredients and rent are rising. But in mid-tier and upmarket restaurants and bars, prices are rising disproportionately—simply because people are showing an increasing willingness to pay inflated prices to sit in a café decorated in an industrial chic style, or to sip a cocktail created by a bartender who cracks refined jokes.

In fact, a report last year revealed that restaurant prices were up by 10% to 20% despite an inflation rate of only 4.6%. Experts attribute part of the blame simply to diners’ willingness to pay up.

Arnold, a 32-year-old entrepreneur, spends about $2,000 to $3,000 a month on social occasions. “The main thing that costs me a lot of money is food. I can spend more than $1,000 on food each month,” admits Arnold, who takes his girlfriend out to cafes and restaurants at least twice a week. “I don’t drink as much as I used to, so my other expenses are mainly going to the casino and playing games at LAN shops.”

What to do? There are ways around this other than resigning yourself to spending the rest of your days in the lonely cavern of your bedroom. Find ways to socialise without spending much money, take up an inexpensive hobby or whatever.

Are you a broke Gen Y-er? Commiserate in the comments!