Wednesday, March 17, 2010

Saving money during NSF days

It's good to talk to people. When you do, you learn more about the broader world and you'll realise perhaps your own problem is not so unique and is small compared to others. Everyone has a story to tell. After reflecting upon them and consolidating them, I'm all ready to blog about it.

This time, I heard about this young chap who is still in national service. The spending habit is quite horrendous actually, because he admitted that he spends around 90% of his pay. I don't know what's the NSF pay these days, perhaps $600? That's quite a good amount, if one plans something about it. The excuse for not saving now is that the pay is too little, so there's no point in saving small amounts like $50 or so.

So the conversation goes on and he was asked whether he would save if he starts earning a more healthier pay check - like $2000 or $3000? He said yes, maybe. Upon probing further, the 'maybe' is because he might be buying a car or a motorbike upon reaching that amount. In other words, if you're not saving when you're earning peanuts, you also won't save when you're earning big bucks. What will change when you earn more? Nothing, if you don't change yourself.

Is this representative of the younger generations? I've a feeling it is. Good for the economy, bad for themselves.


I came from the days when national service had to be done in 2.5 years. I remembered that the maximum pay I got was around $360, and that's when I'm a few months away from ORD. I did not take pocket money from my parents upon entering army, it's not right. In fact, I even give them money. As for the exact amount, my memory fails me - I think it's either $50 to $100. I spent little myself because when you book out on sat afternoon and had to book in on Sunday night, the last thing I want to do is to go out. I also don't have a habit of going to the canteen. So maybe I spend like $100 a month? I only allow myself to spend part of my 'bonuses' like IPPT and marksmen award. The rest I saved it.

Let's tally the figures:

Pay: $360
Parents: $100
Own expenses: $100

Amount saved: $160 each month
Over 2.5 yrs = $4800

A little goes a long way, my friends. If you are not going to save a part of your income, not matter how tiny, you're not going to cultivate that habit of saving more when your income grows bigger.

42 comments :

AK71 said...

Hi LP,

I remember when I was in primary school (decades ago), we were introduced to the POSB Squirrel and we had to start a savings account. For signature, we used our thumb print. I was using my thumb print till secondary 1! I only switched to a signature in secondary 2 and I am still using the same signature today. I digress.

The habit of saving must be cultivated from young. I wonder what happened to the POSB Squirrel.

la papillion said...

Hi AK,

Haha, I remembered it too, though I only started to have my own account when I'm in JC1. I'm still using that account :)

I do agree, savings must be cultivated from young. But when I looked back at my own history, I don't remember my parents telling me to save or anything. They don't give me a lot of pocket money to begin with, so perhaps that's the incentive and motivation to save up.

How to cultivate it? I think I should begin to explore on this, in the event that I have a kid in the future.

From what I observe, a lot of young people are net spenders.

Createwealth8888 said...

Now, POSB is even smarter. Got coin deposit ATM at school. Once coins got into ATM. Sorry. you can't break the Piggy Bnak.

la papillion said...

Hi Bro8888,

Wow, I didn't know that. It's good :) I supposed they don't charge you a fee for putting coins, unlike those machines outside.

I think FF blogged about this before.

Musicwhiz said...

If a major event did not occur about 7 years ago to shake me from my reverie, I think I would be one of those "net spenders" you talked about.

I was a curious case - I had free flowing pocket money most of my childhood and never cultivated a savings habit (parents did not readily instill it). But when that major event occurred, it gave me a jolt.

Now, I save 50% of my net salary and find it very comfortable.

Cheers,
Musicwhiz

la papillion said...

Hi mw,

It'll be interesting if you can share with us the lightning bolt that jolted you out of your comfort zone, if it's not too intruding :)

But, you know, it's never too late to start a good habit :)

PanzerGrenadier said...

Hi LP

I learnt how to save by watching my parents, especially my mother who worked full time, looked after the family during weekends and took care of her own financial needs. In fact, she is more savvy than my dad when it comes to investing in property.

Because of the home environment which encouraged savings, I also went through NS and managed to save most of my allowance as my unit was operational so we stayed in for most weekdays and only had the occasional nights-off. Saturdays and sundays was spent catching up on sleep, reading and playing computer games.

I only really started spending money when my daughter was born :-)

But I still aim to save 10-15% of my income (if not more) monthly after factoring in household expenses and what not.

That's why I like the concept of living within your means. It's really about calibrating your lifestyle to your income and you'll be comfortable.

Be well and prosper.

Musicwhiz said...

My dad lost his job in 2003. Worst thing is, he still had a mortgage to pay for. He has since found another job, but the mortgage is still being paid for! And mind you, he's nearly in his mid-60's.

That's what happens when you buy property at the peak of the cycle....

Createwealth8888 said...

Hi MW,

Did your dad upgrade his home?

Cheng said...

During my NSF days I give $100 to mom and $100 to dad. :)

Cheng said...

Just to add on...$100 each monthly haha... I spent like only $200 a month. Very no life. >.<

Createwealth8888 said...

Cheng, when you give your mum $100 and it is likely she is saving up $100 for you.

JW said...

Hi LP,

I taught tuition during army and did extra duty for some extra side income, but spent quite a bit on my gf.

Exited army with about $10k. I came from the era where the monthly pay for a CPL is $560.

Musicwhiz said...

Yes, "upgraded" from HUDC to Condo. Problem was they were waiting for prices to fall back in 1994-1995 period. In the end, was too impatient cos prices kept rising, and so bought close to the peak in 1995. We all know what happened. Prices went downhill until now just starting to pick up again.

Problem is, the loan is still there! Sucks.

Cheers,
Musicwhiz

Anonymous said...

Hi LP,

My Dad is a saver, mum is a spender within her means.

The virtue of saving was inculcated by dad, we had our uob heavy bulky bronze cow and pig to put our coins. haha.. I always prefer those from other banks.

Same environment, bro is spendthrift and I am thrifty. He saves small percentage of his income. I spend small percentage of my income.

I used to get 50 cents in P5 for pocket money. I asked for a raise when sis also received 50 cents & she was P3. Mum gave me 5 cents more :) I was delighted but sis mocked me till this day. hahaha.. it was huge saving. I remember feeling very rich when I saved $1.4 out of the 5 cents increase.

Saving from tuition income after JC was good.

You are right LP, if one does not save from small income, how to expect saving from huge income? Be thankful that the same person does not de-save when income grows or live out of future income.

Its harder to save in some countries. I have friends (middle-lower income) from US and Ireland who live from hands to mouth. After paying for housing and household expenditure, they hardly have anything left. In a cold winter, the house had a big hole and they could not find $ to repair it, cold air kept coming in and freezing her. She could only repair it when she received a tax rebate that year. I read somewhere that a huge % of USA citizens do not even have a saving a/c.

Thankfully,our income are generally higher than our cost of living and we could save if we want to.

hh

Createwealth8888 said...

Time will come when it becomes harder and harder to save as there are limits to household expenses cutting unless one want to live poorly.

So it is not wise to project too much on your future saving capability unless you don't believe in living a reasonable well balanced life style but enjoy watching at rising bank saving account.

Anonymous said...

I guess there is a time for everything :)

A time to save more and a time to save less :)

白族 has a saying "一苦,二甜,三回味"

Its easier to save when you are younger (albeit on a lower income) because you are on your own. You may enjoy the frugal lifestyle but with a family, you need to take family memebers into considerations.

Likewise a spendthrift needs to adjust the lifestyle after married.

Indeed a well balanced lifestyle is impt although each may differ in the opinion of "well-balance".

Many American are not savers but they give even when they are in debt. Doesn't sound too good for chinese, we need to take care of ourselves before taking care of others.

What about the paradox of thrift? "the more we save, the less we save"

Thanks LP for the interesting post :)

Cheers,
hh

Anonymous said...

It's the percentage of what goes to saving rather then the amount. It took me a long tome to save $100 when iwas young. Now, it is only a fraction of my kids ang pou money.

la papillion said...

Hi PG,

Thanks for sharing with me :) Wow, looks like your mum is a capable women :) I'm sure you would have inherited her ways in money matters, haha!

The book you recommended - Your money or your life - is great. I think everyone should read it :)

la papillion said...

Hi mw,

Wow..looks like property is not the thing for your dad. Such is the danger of buying at peak, with leverage!

A good lesson for us to learn.

la papillion said...

Hi Cheng,

Thanks for sharing :) Wah, you very good kid, haha :)

la papillion said...

Hi JW,

Wow, looks like you made a lot from this and that :) It's great that you have so much after army - helpful to defray off expenses in uni :)

la papillion said...

Hi HH,

Thanks for sharing :)

That's the problem - same environment, different results in kids. Must really find out how to teach kids the proper values in money, haha :)

la papillion said...

Hi bro8888,

I think HH is right. There's a time to work hard and a time to save hard. When I'm married with kids, I think it'll be harder to save that much. But at the same time, I will work hard to increase my earnings, so hopefully net net I still can maintain my saving rate.

Must save more - then can use that capital to do a lot more things :)

la papillion said...

Hi anon 18mar7pm,

I think it is important to look at both the absolute amount and the % savings. Both serve a role.

No point saving 80% when it only amounts to $100 per month. I would try to earn more instead, to push up to a respectable absolute dollar value.

Jackology said...

Hi all,

I am sad to say that i was a spendthift for the earlier part of my life... The sort who spend based on how much he had left. I got married a while back and that really motivated me to start earning more and saving much more. I am still working towards my goal as I speak.

For the people who are unable to save much yet, do not despair. Do not blame for starting this journey late. Just make sure that you can reach your destination eventually.

la papillion said...

Hi anonymous,

Thanks for your inspirational story :) I agree - it's never too late to start :) No point whining, just get your ass up and moving, and celebrate by wining :)

mm said...

LP,

Hi there. Its me again :P I like this blog of yours. Keep it up.

Both the wife and I are savers. I inherited this from my parents. When I was little, I used to stand on the streets of Nee Soon selling kueh with my mum. Its difficult to spend alot of money when you know each kueh brings in only 20cts.. :(

The generation these days would call it a tough childhood, waking up at 4am on weekends to help my mum. I never give it a second tot cos' it's just the way it is. :)

The parents need to set an example. If the parents are both spendthrifts, how do you instill this saving habits?

My son has a SUPERSAVER passbook. He saves about 30% of his daily allowance. He also donates 10% of it daily to a "piggy bank" that will go to charity.

These habits are almost "inherited" from the parents. Children learn from their parents.

Good cheers,
mm

Jackology said...

mm,

Well said. I did not grow up a saver. But my wife did, so I am learning from her.

It is my intention to cultivate saving habits from young for my kids. If it starts from young, eventually they will grow up with consistent saving part of their life.

to LP, your articles are insightful. Please keep up the good work.

Jack

la papillion said...

Hey mm :)

Thanks for visiting my blog :) You gave a very interesting case study. Hmm, I agree with you. If the parents are not good examples for their kids, it's hard for the kids to pick it up themselves.

Come to think of it, while my parents didn't tell me explicitly to save, they did set an example for me to follow.

I'll remember to do this when I have kids :)

Thanks for sharing!

la papillion said...

Hi Jack,

Wow, your wife sets a good example :) It's rare to see women who saves these days (from my experiences, which is quite limited).

Thanks for visiting my blog :)

Createwealth8888 said...

Your wife will have secret saving

Jackology said...

Hey 8888, i supposed all wife(s) do... *wink*

LP, she doesn't come from a well-off family. That probably cultivated her good financial sense. Just a few things that irritates me...
1) Relative stingy-ness. She rather not go out for a movie unless I forced her. Do not blame me for we are newly-wedded. =p
2) "Safe" mentality. She go for low risk low gain investment venture.
3) Many more.
Though I would advise that once a couple are married, do spend some times to discuss financial outlook(if not before marriage). =)

Cheers...

Createwealth8888 said...

It is good if one of the couple take the safer path in investment. If both start to be aggressive in investing, may be more risky.

la papillion said...

Hi Jack,

I agree with bro888 that it's good that one of the couple is more risk adverse, the other less so. This would balance and serve as a sort of counter check on each other.

Actually while she is influencing you to be more thrifty, perhaps you can influence her to spend more of what she saves too. I think both of you can do with some elements of each others' personality, haha!

Anonymous said...

I have nothing against saving, but how do you remain sane in NS by only spending $100 a month??? You wouldn't be able to have a life outside of NS!

Jackology said...

Hi LP and 8888,

I do agree with you about having a couple having 2 different perspectives in terms of money management. That way, we can share our best practise in term of that aspect.

Hi Anonymous,

$100 a month is not sane, i agree... If you would to think from another perspective, just recall, when is the last time you had an expensive meal... Is it necessary? What if you go without that expensive meal?

It is like, how people are willing to skip movie outing and rent dvd instead. I believe what we wish to bring across is to understand your real need and then spend accordingly. And lemme emphasize, I also agree with 4 limbs up that spending $100 a month is way too extreme. =p Extremely low. But I am in awe of how it can be achieved. =)

la papillion said...

Hi anonymous,

My NS days are around 13 yrs ago...things are not as expensive as it is now. That helps a little. I remember watching movie costs around $5 or something only, compared to the current $8 to $10.

I also mentioned in the post that I can only book out on sat afternoon and had to book in on sunday evening. I don't do clubbing, nor do I smoke, hence there really isn't much places where I can spend on. I don't have a gf during army days, and my best pals are with me in the camp, so I meet them throughout the week, with the occasional nights off to watch a movie, have some good meal at the food court and play some arcade.

However, after 1 yr of going to the same shopping mall (lot 1), I was so sick of it that I stayed in bunk instead of going out. Me and a good friend started jogging around the camp and soon plenty more joined in. I read voraciously during army and life changed tremendously when I decided to change my shy personality and go all out when I leave army and go into Uni. Did lots of reflection and thinking. I dare say army is one of the most important period in forming my character for success.

A long answer to a short question. So how does one spend $100 in army? Do as I do. I have a life while in camp, not outside :)

Anonymous said...

i encourage my 7 yrs old boy to save by matching his savings everyday.

So everyday, i will ask him to clear his wallet n count how much had he save.

I gave him $1.50 for recess & $1 for lunch. And i will match the balance each day.

Eg. if he save $2, i will give him another $2 to encourage him to save more.

And if he save $1, i will only match $1.

You will be surprise, that he know that the more he save, the more he get, n the faster his $ will grow.

Elaine

Jackology said...

Hi Elaine,

From a certain point of view, I dun find it correct. It is practically like telling your son that 100% returns in a split second is highly possible in this world of ours. It is not very realistic, considering that his allowance will get more and more, and his mean to save can get higher and higher.

One day if you cannot keep up and decide to forgo this practice, what might happen is that he will discover to his disappointment that his 100% return investment vehicle is gone.

Now, I am not a Dad to anyone yet and I do acknowledge that it is not an easy task bringing up these little bundles of joy and to cultivate in them the right mindset to have.

Jack

la papillion said...

Hi elaine and jack,

I think as a motivator, elaine did the right thing. The idea is to start them off with a good habit. When elaine eventually stops the 1-1 top up, then it's a good time to introduce the concept of interest.

"Mama gives you $1 for every $1 you save, so how many % is that?

"100%"

"Ok, that's very good, but do you know what much the banks give you for every $1 you save?"

"erm...$1?"

"Nope, it's $0.00125"

"....."

It can be a good start to introduce the idea of returns to a small kid :)

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