Is it possible? It definitely is. You don’t need an inheritance, nor do you need to be an investment banker, management consultant, or software engineer to reach that goal.
Alright, I’ve hooked you in with the headline. Now here’s the honest truth – you need to be very clear that you want to achieve this goal, then be very disciplined to reach it.
Beside being or retiring a millionaire, I think some Singaporeans use the S$100K by 30 years old as a life goal or financial milestone that they desire to achieve. You won’t be a millionaire yet, but you will be one step closer to your dreams.
S$100K is a significant milestone not because it has six digits, but rather it’s the phase where you know you are not really struggling to make ends meet anymore.
By the way, we are talking about cash here. Not CPF.
There are several bloggers who have shared their stories, (Budget Babe shared hers in 2015, The Woke Salaryman did his in 2019) and of course, countless others on Google have come forward publicly to share their stories about how they have done it.
I don’t see it as showing off, but rather as a form of sharing in the public domain that people can definitely benefit and learn from. How often do you talk about such topics in real life anyway?
One common thread about the stories that I find is this – you need to spend less and save more.
It involves making sacrifices to achieve what you want, either by cutting spending on unnecessary items or by increasing your take-home salary, so you can maintain the same lifestyle but increasing your savings rate.
Those are simple concepts but difficult to internalize successfully because saving money is sometimes not a priority for some of us. Instead, if you choose to prioritize instant gratification or quality of life, choosing to spend money in the spur of the moment to enjoy immediate benefits (think – digital games, bubble tea, Starbucks coffee, eating out, cabinets of clothes), then the goal might be harder to reach.
I am not saying that you shouldn’t do those, all I am saying is that if you prioritize those over wealth accumulation, then the consequences cannot be anyone else to bear.
Once you’ve understood the trade offs, let’s talk about time.
Time is the essence, but you have the luxury of being young
You’ve probably heard that you need to work hard when you’re young, that’s because you benefit from the ability to make mistakes, fail early, experiment with novelty and still be forgiven if you screw up. You also build the right discipline and mentality to hustle and get what you want.
If you’re a Singaporean female, then you’d be around 23 years old after graduating from university; 25 years old for guys because of national service. That means you have between 5 to 7 years to achieve your goal (if you start from scratch). Some guys might have saved their allowance from national service, and some girls might have given tuition classes during the long break, so it doesn’t always require you to build up your savings from nothing.
Either way, assuming you have only 5 years to build S$100K, you need to save at least S$20K a year, or S$1.6K a month.
If you have no loans to pay, saving S$1.6K a month isn’t very difficult. But if you have financial commitments such as a mortgage, university loan, then you need to find ways to let you save more or spend less. It’s simple math.
But it’s so expensive in Singapore
Are you mad? Save $1.6K a month? I can’t even feed myself. My plate of chicken rice already costs $4.
This is the stage where most people give up… because they look at just savings rate alone. Obviously due to inflation, financial commitments, low wages (and tons of other reasons), we gripe about the high costs of living in Singapore.
To be honest, we have relatively affordable transport and food options (hawker food) compared to other metropolitan cities like Tokyo, Shanghai, Hong Kong and Seoul. We have short transportation commute times, and we have a stable social-political landscape that’s conducive to live and work in – this is important so that you retain the value of your earnings (Singapore Dollar).
We also have a CPF system that helps us save for retirement. One less worry about whether we have enough to retire. We now just need to focus on building cash for the present.
So, how do you save S$1.6K a month? There are two components – increase your income, or reduce your expenses.
Why reducing your expenses alone doesn’t work
There is usually a limit on how much you can reduce your discretionary spending.
If you need to pay your bills, put food on the table, give stipend or allowance to your parents, then you would have limited room to make further cuts to your spending.
Plus, the maximum you can save from reducing your expenses is how much you would have spent on them anyway. If you spend S$500 on bills, utilities and food every month, even if you stop everything today, you would have only saved S$500.
Not only would you compromise your quality of life significantly, it would take you a long time to reach your goals.
Focus on increasing income
The main focus of your twenties is to increase income. There are many sources of income, employment income is only one source.
In employment income, you are paid when you work and employed full time by your employer. You exchange time for money. You have 24 hours in a day, no more no less.
How do you increase your income?
You can be asked to be paid more. This means you per hour wage increases, you become more valuable per unit time that you exchange. This comes with the assumption that you are deemed worthy of that higher wage.
You can also work longer. While your per hour wage doesn’t change, you might earn more (if you’re paid hourly) or paid over time. You’re capped by the number of hours you can work every day.
You can ask others to work for you. This means you pay others in exchange for their time. While you pay them wages, if the value that they bring is higher than what you pay them, then there is a positive return for you.
You can ask your money to work for you. This means you can put your money into some investment or savings product and earn a return of between 1% to 10% per year. Read my finance posts for more.
Lastly, you can diversify your income. This means you build alternative sources of income, such as tuition, provide freelance services, start a business selling cakes, organize fitness classes etc. As long as you can provide some sort of value that people want to pay for, you can build a secondary source of income.
The truth about increasing income
Unlike reducing expenses, increasing income isn’t easy. They are definitely a lot harder because you need to make a lot of upfront effort to start.
Say you want to get a salary increase at your job. You need to spend months or years proving yourself, demonstrating your value, get into the good books of your bosses, and hopefully, earn a raise.
If you want a new job, you might even need to invest a lot of time, building your resume refining your skills, take up courses and certifications, and go through many rounds of interview to get the job.
If you want to find alternative sources of income, it’s not only hard to get started, but also hard to execute – when can you find free time to pursue it? How do you start running a business?
The moral of the story is that it’s not easy to increase income. To reach your goals, you need to be determined enough that you want to put in the effort to increase your income.
What to do
I’ve spent a considerable amount of time on the framework. Now let’s talk about execution strategies without beating about the bush.
Take an accelerated university degree (e.g. 3 years instead of 4)
Find an accelerated degree program that gives you a head start to start building your income. I like NTU’s 3-year degree program for the business school, but there are others (e.g. non-honours) that are equally short.
You get the benefit of saving tuition fees, the interest on top of it, and the opportunity cost of not working. If you finish school one year earlier, you would have gained an additional year of salary and work experience (and closer to promotion too).
You don’t necessarily need to go to university. I find that having the right skills is equally valuable in the workplace that’s constantly changing. Just three months ago, nobody thought that work from home was possible for their company. Now, even teachers need to learn how to conduct interactive classes via teleconference. Is a degree going to teach you that? Not really, but a curious mind will.
Skills can be easily learned online today, especially digital ones for the digital economy. edX, for example, offers courses from popular universities around the world for free. You only pay if you need to get a verified certificate. Even YouTube has many free courses to get started.
“An investment in knowledge pays the best interest.”– Benjamin Franklin
Internships are also brilliant opportunities to acquire experience. Always be resourceful in finding internships. The bigger companies have proper processes such as cyclical intakes and they are highly competitive. But you can equally find internships at smaller, faster growing companies that are equally valuable. You might not get the brand name on your resume, but you acquire skills that make you potentially more valuable to your future employers.
Don’t be too hard up on finding the popular companies that everyone wants to compete for. You don’t need to work in a tier-one company during your internship. The most important things are skills (mastery), portfolio and track record of success.
Find additional sources of income
I briefly talked about this earlier. But there are many ways to earn money on the sidelines. There are those that are limited by hours, such as giving tuition, doing food delivery, ride-sharing, personal coaching, or teaching classes.
“Don’t stay in bed, unless you can make money in bed.”
Others are limited by capital and knowledge, e.g. starting a small business. The gist here is to find what you like to do, what you do well, then find others to help you build a business.
It’s usually not that difficult to start one, but you need to know what you don’t know, bridge that gap, and then take it from there. Online businesses are easier to start (less capital intensive) but more knowledge-intensive (you need skills and knowledge to avoid wasting time and money). The good thing is there are plenty of free and paid resources online to help you with that (or hire me!)
Optimise what you currently have
Optimizing what you already have is about making full use of what you are already doing. For example, if you are subscribing to Spotify or Netflix, why not share a family plan with others and save money at the same time?
If you are going to make an online purchase, why not find the best credit cards to go along and earn cash back or miles? Why not use my affiliate links if you’re going to sign up with something anyway? (Here’s also why not promote my blog anyway?)
If you’re studying, can you buy and sell books and notes? Can you reuse calculators from your seniors? Can you buy your books cheaper (from overseas bookstores)? Do you really need a hard copy? Buy them second hand and sell them again and you get a close to a free loan of the book.
What not to do
Don’t buy a car
Cars are expensive AF in Singapore. I won’t go into detailed calculations but you need to consider paying petrol, road tax and COE premiums on top of the car ownership costs. Do you need a car in Singapore? Not really, unless you have a family and you need convenience. It’s also cheaper to take a Grab everyday if you need it.
Actually, public transport is pretty reliable and convenient in Singapore so I don’t see a lot of strong reasons not to use it more often. I stay in the Western most part of Singapore and even so, while I sometimes gripe about the long commute times to work, I use it as a chance to either catch up on sleep or do something productive (read a book, listen to a podcast, or catch up on my social media feed).
Take the bus or MRT, and if possible, avoid owning a car or using ride-sharing platforms unless absolutely necessary (midnight, after clubbing, etc). You’d be surprised at how much you have in your bank account after 12 months of this simple habit change.
Don’t buy sh*t you don’t need
“We buy things we don’t need with money we don’t have to impress people we don’t like.”― Dave Ramsey
Stop giving in to peer pressure and waste your hard-earned money on things nobody cares about. If you always buy material goods in the short term, sure, you might feel that temporary high from that impulse purchase, but you might end up in a financially dire situation where you need to start getting rid of excesses or unwanted items in your closet.
Before buying something, I always ask myself, do I need it? If yes, do I need it now? If yes, I wait another few days before buying.
This thought process slows my purchase decision and makes me a little more conscious about where my money goes. If I really need to buy something, I will buy it anyway – but at least I’ve given it enough thought.
“If you buy things you do not need, soon you will have to sell things you need.”
Don’t always eat out
This might be a bit controversial but I find that food and beverages account for 70% of my budget spend each month. What’s the scariest part? It’s mostly on drinks like coffee and bubble tea.
I admit it’s tough to do a mindset change where you reduce such consumption of outside food. During this circuit breaker period, I was forced to cook more regularly and eat out less often, which help a little in shifting my food preferences.
The hardest part about this is the habitual nature of our eating-out habits. It’s much easier for some but harder for others because they have been acclimatized to the routine of takeaways. If you can, cook more often, and if you have a partner, cook with them or try to reduce dining out frequency. You don’t have to eliminate it, but make small incremental changes in your life – over time, even 1% compounds.
You make the choice
By now, it should be clear that there’s no easy route to the S$100K goal. Those that have done so made considerable sacrifices in their lifestyle or put in a lot of effort to get where they are.
But is it impossible? I don’t think so. It’s definitely not rocket science, you’ve been guided – you just need to make the right life choices to achieve it.
(The author reached the milestone before 27, but his story is for another time)