Singapore constantly appears on the top of the list of the most expensive countries to live in. Living here is the dream of many, but it comes with a fair amount of challenges. If you are a young working adult or a student who just graduated, you need to first educate yourself on the costs of living here. With the right information, you will be in a position to make the right financial choices each time and have a brighter and better future.
Every individual is unique, and how each person spends is influenced by a number of factors including personality, age and income. There is a sea of information out there, and it may be quite confusing to know which data fits your lifestyle. Below, we have broken down for you the 7 major expenses you will most likely incur in your lifetime.
1. University Education
Tertiary education is one of the best investments we make. It is an important phase before one jumps into the job market. Unfortunately, it is also one of the biggest expenses in our lives, with the average cost of a degree going at $21,000. Luckily, the Ministry of Education (MOE) and Central Provident Fund (CPF) provides tuition loans to enable more student to pursue their higher education without worrying about fees. The loans can cover between 90% and 100% of all fees depending on the option you pick.
Interests range between 2.5% and 5%. Repaying these loans is the tricky part, and one needs to carefully consider the available options before picking any loan. The repayment is affected by the size of the loan and time you take to repay it. Keep in mind that the more time you take to pay it back, the more you will pay in interest charges. To avoid being paralyzed by the burden of your student loan, you need a smart repayment strategy.
Once you land your first job, the first step you should take is to calculate your monthly expenses. This should include food, transport, phone bills and rent. After this, you will come up with a budget depending on your earnings and always stick to it. Now, you can set apart part of your income to repay the student loan. Portion your money wisely and make sure you are left with money for saving and emergencies.
2. Holding A Wedding
Marriage is one of the most important phases of our lives. Still, it comes with a hefty price tag. On average, a wedding in Singapore costs between S$30,000 and as high as S$80,000. Getting legally marriage only costs S$42 but the bulk of the money is spent on the reception ($15,000 – $36,000). In most cases, the money spent on a wedding is determined by your location, number of guests, and the theme you pick.
To have a reasonable wedding budget and to avoid disappointments or overspending, you first need to know what to spend on. Costs include pre-wedding photos, wedding rings, gown and suit, banquet, wedding day services such as photography, car rental and entertainment, makeup, flowers, cake, and don’t forget dowry for those doing a Chinese wedding. As a couple, you can open a joint savings account specifically for your wedding. You should both agree to channel a certain amount of your salary there. Start saving early and plan your wedding depending on the finances you have.
3. Buying A House
Once you start a family, you will need a larger place to stay. This makes owning your own home a priority. Purchasing a house is one of the big-ticket acquisitions we get to make. Here, you get to pick between a BTO and EC type of home. They both have different terms and costs. The costs involved in buying a home is more than the price you negotiate with the seller. Other costs include the loan, homeowner insurance and legal fees.
The cost of a non-mature four-room flat is S$295,000 to S$350,000. A HDB concessionary loan requires a 10% down payment while a bank loan needs 20% of the valuation. Most home buyers pay between 0.72% and 1.59% annually for a thirty-year mortgage. With financial discipline, you can manage to save for the down-payment of the home you have always wished for.
4. Home Renovation
Everyone loves to stay in a neat and attractive place. To keep your house functional and looking attractive, you need to maintain it. This is where renovation comes in. Refurbishing your home comes with countless benefits. It increases the value of your home, allows you to customize and maximize your space, and has a positive impact on your family’s health and wellness.
First, the cost of a renovation will depend on the condition and age of your house, your design needs, materials you prefer and the contractor you pick for the job. For a 4-room HDB flat, the average cost is S$55,000. This covers demolition, carpentry work, plumbing, electric work, flooring, painting and appliances. Doing it yourself can be cheaper, but you need to consider your level of expertise and the time you have at hand. Always go for quality when choosing materials and select experts who have a good reputation. For financing the project, many homeowners prefer taking a renovation loan as its interest rates are 6-7% lower than a personal loan.
5. Buying A Car
Owning a car gives you freedom and the convenience to get around on your own terms. It is also an expensive venture that comes with additional maintenance and repair costs. The price tag of an entry-level vehicle is around S$100,000 including the Certificate of Entitlement (COE). Apart from just looking at the price tag, another method to calculate car ownership cost in Singapore is by looking at how much you are likely to spend on the vehicle for the next 10 years. A new ride comes with recurring costs such as monthly loan interests, insurance, fuel, road tax, parking and maintenance bills.
6. Having Children
After marriage, children might come into the picture. Whether you decide on having a single child or several kids, these bundles of joy come at a price. There are huge expenses involved, starting right from pregnancy to when the child leaves your home as an adult. Some of the major costs include delivery at S$14,000, clothing, school fees, healthcare, and entertainment. In total, it takes around S$ 360,000 to raise one kid from the first day till the age of 20 years.
The best way to manage these expenses is to start planning how to pay for them. For delivery, Medisave can help cover some costs. If your child is in pre-school, you can take advantage of government subsidies. By making the right decisions today, your kids can have a great childhood and future.
7. Planning For Retirement
The official retirement age in Singapore is 62 years and the life expectancy is 82.8 years. This means you spend around 21 years in retirement. To have a comfortable life at this stage, you need at least S$1500 every month or a total of S$300,000. Most Singaporeans start saving in their 40s, and the longer you wait, the more you will need to save. To avoid financial difficulties during your retirement, it is best for you start saving early, be consistent and don’t underestimate how much you may need.
Throughout our lifetime, we encounter situations where we need to spend a significant chunk of money. Whether it’s on healthcare or making a major acquisition, having a proper plan can protect you from landing in unending debts or financial pitfalls. Luckily, there is a lot of information that we can utilize to help us make the right choices. By creating a smart saving plan and choosing your loans carefully, you and your family are set to have a comfortable life.