If you're staying with your parents after graduation, is living on just $600 a month feasible if you want to save for your future?
While most young adults can't wait to leave their parents' home and start a life on their own, it's tough to do so straight out of university in a city as expensive as Singapore.
In fact, despite the growing trend of millennials moving out before marriage, Singstat shows that only 14,100 citizens younger than 35 were actually living alone in 2018. Instead, most young adults decide stay with their parents to save enough to purchase a flat, with many citing financial constraints as a primary reason for not moving out.
So what would be a realistic budget if you want to save without sacrificing your quality of life? Based on the cost of living in Singapore, we estimate that a $600 monthly budget would be sufficient for you to cover basic necessities and recreational activities. But is it realistic? We break down the spending of the average Singaporean household to find out.
WHAT YOU'LL SAVE WHILE LIVING WITH YOUR PARENTS
Unlike the small percentage of young adults who move out right after University, choosing to stay at home will help you save a considerable amount per month.
First, if your parents don't require a small rent payment, then you can save between $748 and $1,598 per month that you otherwise would spend on necessary expenses. This includes expenses like rent, utilities and home insurance.
Even if your parents expect you to contribute a marginal amount, taking up the task of paying for the home insurance or electricity bill would still save you a considerable amount of money per month.
Estimated Average Living Expenses With & Without Roommates
NECESSARY EXPENSES FOR A SINGLE ADULT LIVING AT HOME
Despite saving on some of the major expenses like housing, Singaporean adults who live at home still have financial obligations. This includes necessities like food, transport, healthcare and mobile and internet subscriptions.
Public transportation, mobile and internet subscriptions will make up the smallest portion of your necessary expenses. For instance, telcos like Starhub, m1, and Circles.Life offer no contract plans with 15-30GB of data from just $18-$25 per month.
Even fibre broadband plans from various providers cost between $34-$44.90 per month and can be affordable for your budget. Public transportation will also cost you less than $85 per month, even with 14 trips per week.
Average spending on necessary expenses per individual
Food and healthcare, on the other hand, eat away at a larger portion of the typical Singaporean budget. Food ends up taking up 50 per cent of your budget, regardless of whether you are spending as little as possible or like an individual in a median income household.
In fact, if you spend like the median income individual, your necessary expenses will already put you over your budget, mainly because your food expenses can cost over $300 per month.
Luckily, this is one area where you may have more leniency to cut costs, as transportation costs, mobile and internet bills and insurance are fixed costs and may be difficult to negotiate to a lower price without sacrificing their quality.
DISCRETIONARY EXPENSES WHILE LIVING WITH YOUR PARENTS
Just because you are trying to save, it doesn't mean that you can't indulge once in a while. With Singapore being a fashion and cultural hub, it is not surprising that households spend between $268 and $830 on travel, shopping, and recreation.
However, as we've seen above, necessary expenses will eat up quite a bit of your $600 per month budget. Luckily, discretionary spending isn't something that recurs on a monthly basis. Therefore, if you find that you overspent one month, you avoid that expense the next month and get back on track.
By spending just $86 per month on things like shopping, travel or recreation and keeping your necessary expenses low, living on $600 per month is doable. However, spending on recreation and shopping at median income levels will put you over your budget even if your necessary expenses are on the lower end.
Average Spending on Discretionary Expenses per Individual
YOUR QUALITY OF LIFE WITH A MONTHLY BUDGET OF $600
The average Singaporean who lives at home actually spends almost twice the $600 budget, indicating that it may be a difficult task to accomplish for individuals who are used to a certain standard of living.
On the other hand, cutting your spending to the bare minimum of $487 on necessities and recreational activities may cause your quality of life may suffer. So if you want to spend as little as possible but maintain a certain standard of living, increasing your budget slightly to $600 can give you $113 of extra wiggle room.
Thus, by choosing to live at home and spending just $600 a month, Singaporean taking home the median wage can save more than $20,000 per year that they can put aside as a nest egg or save for their goals.
Total Expenses for Adults Living at Home by Income Quintile
HOW TO CUT DOWN EXPENSES TO SAVE MORE
Most individuals spend more than $600 per month on day to day expenses. However, we've also seen individuals who spend less than that, whether it is due to financial constraints or frugal ways of life. If you are living with your parents to save money and want to keep your spending down, there are a few ways to reach the $600 per month budget.
First, keeping your hawker meal costs between $3-$5 can bring your lunch expenses down to $60-$100 per month. You can also opt for cheaper restaurants, dining credit cards to receive discounts and consider cooking meals at home.
When it comes to shopping, you can consider switching to a capsule wardrobe and leverage shopping credit cards that offer perks or other discounts. Furthermore, while we all want to travel and relax, it may be better to keep your trips local for the time being and consider day trips or weekend getaways.
You should keep in mind that saving money and being committed to a budget takes time, patience and dedication. Unexpected expenses can appear out of nowhere and throw you off track, but that shouldn't discourage you from saving for your goals.
This article was first published in ValueChampion.