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Spending more than what one earns – how young Singaporeans end up in debt

Posted by temasektimes on June 26, 2012

Most young Singaporeans find themselves working like slaves for the rest of their lives to service their debts because they are spending more than what they earn, according to a commentary by Financial Adviser Kelvin Ng on Yahoo News.

Despite their meager starting pay, many young Singaporeans have no qualms splurging on branded products, expensive holidays and cars which see them ending up with a mountain of debt.

Kelvin Ng used a real life example of a Singaporean couple to illustrate his point:

“Take for example a Singaporean couple who falls in love and decide to settle down. The man is in his thirties and woman in her twenties. They have a combined income of about $8,000. The man buys a proposal ring that costs $7,000 (Larry’s brand as girlfriend likes it). The couple also buy a pair of engagement rings that costs $6,000 (Cartier due to peer pressure). The wedding photo package costs $6,000, wedding dinner costs $7,000, honeymoon to Korea $3,000. They then decide to apply for a DBSS flat after countless tries with HDB’s BTO without success and have to cough up $350,000 (by taking up an HDB loan and wiping out their CPF and savings). They then spend $20,000 on minor renovation and furniture.

The man decides to upgrade his car as he could not resist the latest continental car design and coughs up $100,000 (by taking a car loan). The man likes to collect watches, saw the latest Rolex and could not resist it. He has no cash but buys it for $12,000 with an interest free 24 month installment since it is so cheap per month.”

The above case study is not uncommon among Gen Y nowadays. In fact, there are many couples with a combined income of less than $5,000 who are living the ‘high life’ which they cannot afford.

Second example of a typical Singaporean couple:

“The man is working as a mid-level manager in a MNC drawing a monthly salary of $3,000 monthly while his newly wed wife earns $2,400 monthly as an administrative staff. They bought a four-room resale flat in Hougang at $400,000 + and took a renovation loan of $50,000 to renovate their place. Then they spent their savings of $60,000 with another $40,000 chipped in from parents for their wedding dinner. The man felt he must buy a car to drive his wife around and got a new Mazda 3 at over $100,000. Before they have their first child, they are already buried deep in a mountain of debts.”

With a starting pay of only $2,600 for a fresh graduate and $1,800 for a diploma holder coupled with sky-rocketing prices of HDB flats and rampant inflation, most young Singaporeans will not be able to live the standard of life they aspire to unless their parents are filthy rich or they earn more than $10,000 monthly.

Instead of complaining non-stop about their predicament, it is time for Generation Y to manage their own expectations and live within their means or they may find themselves stuck in a rat race forever just to service the interests of their bank loans.

Whining will not get you anywhere. Only hard work, realistic expectations and prudent financial planning will help you cope with the harsh realities of life in Singapore today.


15 Responses to “Spending more than what one earns – how young Singaporeans end up in debt”

  1. Jenny said

    Another article to put down Gen Y? Of cos u will be in debts when u get married. The flat alone is a 20 year debt. What happened above is just from a few gen y and u generalize all of Gen Y. How many Gen Y is married at the 1st place?

    • Jin said

      So in order to manage expectations n face the harsh reality of e ridiculous life in singapore today, typical gen y earning below 3k cannot:
      -buy a hdb flat because tat will put them in ridiculous heavy debts
      -get married because they simply do not hv e means to get a decent ring n hv a decent wedding dinner which cost a ridiculous amount today, n also becoz of e above mentioned point
      -have baby becoz diapers, milk powder n general cost of raising a children is way beyond the means of typical gen-y today, n because of the above mentioned 2 pts, they cant hv baby anyway
      -cant own a car becoz coe is ridiculously more expensive den e car itself, so now car has bcome an exclusive rights to order generations, n gen y can only take mrt tat breaks down every other week, buses tat comes every 20min, or e equally unaffordable taxis?
      This article is a typical stereotyping piece of crap coming from an “expert” full of himself juz bcoz he can afford to own a hdb n maybe a mazda3….

    • Patrick is a starfish said

      It doesnt apply to all Gen Y,some had tried to cut costs just to let them pay for their hdb debts in their 20 yrs to come, not only that it doesnt apply to all of them , that likes to spent it on luxuries, just a small takes a lot to start a family, to care for a child’s future and of coz a hdb flat.

    • Alan Lim said

      Don’t get married loh, don’t want to have children in the future loh. You can save a lot.

      do u want that ?

  2. Xavier said

    From what I read, the main killer here is still the escalated HDB/DBSS and COE prices. So I reckon the suggestion from the author is to taking bus and live with your parents.

  3. Paul said

    Firstly, the Gen Y don’t get marry so young. Did the no. of marriages go up or down? Clearly, there is a decreasing trend. Remeber the low blow by LKY on a female PhD student? less marriages ->less babies-> greying population-> more FT! Isn’t this the logic PAP use to justify why we need more FT? I thought the govenment is encourage ppl to marry at a younger age because there is a upwards trend in the age of couple getting marry?
    Next, the HBD is a 20-30 years debt for the couple. HBD will simply wipe out the ordinary account of the couple and we know OA is the bulk of your CPF. Blame Gen Y for not having saving? Please be reminded that times change. We are no longer in the 60s, when 3 generations live under a same roof. This is not unique to Singapore. Please propose a solution so that couples are willing to stay with the in-laws like back in the 60s.
    It is a disgrace to have Singapore so rich and so many millionaires and yet the citizen’s lifestyle are way below the Swiss standard as promised.
    The example you have mentioned are akin to examples that $1k/mth can buy HDB.

  4. Come on you don’t need to be in debt to get married

    Salary – 3k to 10k , depending on wife
    Wedding ring and band – 1.5 k together
    wedding photo – ZERO
    Wedding dinner – ZERO
    Honeymoon – 2k
    Flat – 380 k + 55k COV = 200 k loan, 14 year loan , 85K cash, 150K CPF , 1.5K CPF payment monthly
    Flat renovation = ZERO
    Car = ZERO
    Monthly addtiional expenses – 2 k together

    And yet we are also struggling here (utilities bill 200 and rising , and basic groceries all increasing in price, etc)

    maybe someone should ask WHY Singaporeans have to GET into debt to support increasing expenses (COE, HDB the biggest culprits) without improvement of quality of life – when Darth Zorro can be so happy every time he see his CPF statement , Kao Don Wan can have 8 dollar heart bypass when we need to pay to use our own medisave, Vivian Bastard can spend 300 M to put Singapore on the back page in one tiny column for YOG and yet ask if we want restaurant or food court food for proposed increase in social welfare to people who need social welfare, and FTs coming in to undercut our talents by being cheaper, better (at BS’ing) and faster (at bringing more FT)

  5. Time Survivor said

    Just talk rock!!! Simply bo liao story. Making a mountain out of a mole hill,

  6. GenY said

    What a Joke!! “Whining will not get you anywhere. Only hard work, realistic expectations and prudent financial planning will help you cope with the harsh realities of life in Singapore today.”
    PRUDENT FINANCIAL PLANNING ? Trying to hard sell insurance policies is it ??? More like the need for PRUDENT GOVERNMENT POLICIES u fool….. I’m genY btw

  7. Problem Solver said

    It really depends on how down to earth and realistic the couple are.

    Want Condo like unit and car now- you will put psychological pressure on yourself to maintain your lifestyle. You’ll be in debt for the next 50 years of your life.

  8. Poor man's son said

    mid level manager in MNC earns 3k??? My starting pay after graduation 6 years ago was already reaching to 4k….why kind of dumb ass manager is that? Janitor manager?

  9. Thinker said

    There’s some truths to a certain extent.
    Hubby and my combined income is more than 10k but we don’t buy a condo. We bought an hdb flat and would be able to finance it completely in 3 years. We could afford a 60k reno to make it look like a condo because we not in debt. We own a car each, his continental while mine japanese car. We married in our early thirties so marriage expenses, rings were all not a problem. Our savings were ‘wiped out’ but quickly ‘topped up’ in the next one or two years. Despite earning more than 10k for combined income, we aren’t totally unrealistic to go for expensive condos etc. It’s important to live within our means.

    • Charlie said

      It’s certainly getting more and more expensive and stressful to live in Singapore. I am starting to think of migrating…

  10. Singapore Girl said

    Excuse me, don point every youngster as the same kind. Those who spend and loan like no tml are just someone percent for so many youngster. Why nobody say youngster who start their business as young as 15, selling handmade stuff online?
    Why must magnify those who are bad and compare with every youngster, just becox you happen to meet those bad kind?
    If so, then you are seriously frog in the well. Very pathetic becox you never seen plp who are beautiful and capable in your life.
    Get alive man.

  11. IronMan said

    Is the idiot of an author refering to the idiots PAP ministers/former PAP ministers that invest poorly our CPF monies, resulting in a loss of BILLIONS of dollars and the YOG, loss of MILLIONS of dollars. What generation r they? Gen Y? Btw I am Gen X. This author is another PAPpigs’ dog. What do u think?

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