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Giving Up Luxuries To Live A More Comfortable Life In Singapore

You can retire a lot earlier than you think if you live a simple lifestyle.

All of us want to live a comfortable life. For some people, this could be as simple as having a roof over their heads without being worried of their housing loans and having enough money to buy food for their families. For others, it could be about having the time to do what they really want without constantly being afraid of receiving phone calls from their bosses on Sunday.

Giving up luxuries to live a more comfortable life may sound like an oxymoron. For years, marketers have been telling us that luxuries are essential for a comfortable life.

For example, imagine how comfortable life could be if we all had an Audi A6 waiting for us at the basement car park of our condominium unit whenever we need to drive out to meet our friends for dinner at the celebrity restaurant at MBS. Or if we all had access to home cleaning services that saves us the trouble of spending 6 hours each week cleaning up our 2-storey penthouse unit. Or if we could flaunt our $3,000 Kate Spade bag whenever we go shopping on weekdays with our girlfriends and can afford the time to have a cosmopolitan drink right after that without worrying about our jobs.

Your Luxuries Could Be Making You Miserable

Here is the thing. Your luxuries in life could actually be the things that are making you financially miserable in life.

Take for example the purchase of a car. In Singapore, the comfortable Audi A6 would cost you about $226,000 at the entry level. Even if you a 2nd hand Nissan Sunny, the depreciation would still be about $8,000 a year. This does not even include costs such as interest, insurance, parking, petrol, road tax, ERP and maintenance of the vehicle. In total, you are looking at easily about $1,500 to $2000 dollars per month.

How about a 5-room HDB flat instead of a more modest 4-room flat? In a previous article, we wrote that the difference between the price of the most expensive 5-room HDB flat and the cheapest 4-room flat offered by HDB in Punggol could be as much as $242,000 once you factor in subsidies available. When you include the interest and opportunity cost, the difference could be as much as $458,000 after 20 years. We are not sure about you, but an additional $458,000 for retirement would probably make life a lot more comfortable.

Other small “luxuries” in life can also cost us a lot of money in the long run even without us realizing. For example, having cable TV and overpaying for your mobile subscription plan can easily cost you up to $1,000 or more each year. So could that Starbucks Coffee you buy daily or the once-a-week restaurant meal on TGIF.

Read Also: How To Save $1,000 More Without Trying

Let us take a look at a hypothetical example between 2 households. The Lee Family and the Tan Family.

The Lee Family:

The Lee family has a household income of $6,000 per month. They live frugally and ensure that they invest 50% of their household income. They service their home mortgage using the money from their CPF Account. At an annual investment return rate of 5%, they would be able to accumulate the following amount of money.

Time Period Portfolio
After 10 Years $465,847
After 20 Years $1,233,101
After 30 Years $2,496,776


Let’s not be greedy here. Having spent about $3,000 per month, or $36,000 per annum, we doubt the Lee family would need to suddenly increase their spending to $100,000 per year after retirement (though they actually could!). The point of the calculation is to show that even after 10 years, the Lee family can afford to take things slower. Perhaps one of them could even quit their job and for them to continue sustaining on a single income of $3,000 per month.

Even without saving a single cent after the first 10 years, the Lee family would still be able to retire with a portfolio value of $1,263,675 after 30 years for their retirement.

The Tan Family:

The Tan family are wealthier. With a combined household income of $12,000, they are very much part of the upper middle class of Singapore. They can afford a car (BMW 3 Series, $2,000 per month) and semi-annual holiday trips ($1,000 per month). They also live a more “fashionable” lifestyle and dine regularly with their well-off friends at good restaurants recommended by food bloggers. This lifestyle costs them about $5,000 each month. They also bought a nice 4-bedroom condominium, which requires them to fork out an additional $2,000 per month in cash for their mortgage in addition to their CPF contributions. They have a domestic helper ($1,500 per month) who helps them maintain the cleanliness of their beautiful home.

In total, they spend about $11,500 each month. They invest the remaining amount.

Time Period Portfolio
After 10 Years $77,641
After 20 Years $205,517
After 30 Years $416,129


It goes without saying that their returns pale in comparison compared to the earlier example provided by the Lee family. However, that is not even the scariest thing.

Even after 10 years, the Tan family would have accumulated enough savings only to last them about 7 months worth of expenses. Neither one of them can afford to leave their jobs without having to substantially downgrade their lifestyle. At the end of 30 years, they would have accumulated enough savings to last them about 44 months (or about 3.5 years), even after they have finished paying for their home mortgage. Financial freedom is not something they will be able to enjoy even during their old age.

Our Lifestyle Is Usually The Biggest Hurdle Towards Financial Freedom

Many people think they cannot afford to retire because their salary is too low. That is usually not true. For those of us who are earning $3,000 or more each month, the reason behind our inability to achieve financial freedom is our lifestyle, not our income.

We cannot retire early because we spend too much, invest too little and require too much money to upkeep our lifestyle after we retire. Instead, if we were to spend less, invest more and require less money to upkeep our lifestyle after we retire, financial freedom would be a lot easier to obtain.

Let’s stop complaining that the cost of living in Singapore is too high when we are (ironically) spending a good chunk of money each year taking quarterly holiday trips overseas.

We want to stress that we are not saying that everyone who can’t retire have bad spending habits. There are obviously low-income households in Singapore that genuinely cannot earn enough to cope with the cost of living in spite of their frugal spending.

Think about it, who has a more comfortable life? The Lee family who earns $6,000 per month but spends only $3,000, or the Tan family, who earns $12,000 per month but spends $11,500 trying to maintain their condominium, car and lifestyle.

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