Where did all my savings go?

I started tallying the past records of all my savings recently. My aim is to find out where all my hard earned savings go to. Did I 'waste' a lot of my life energy, which is captured in the form of savings, into frivolous stuff? It's a pity that I only started tracking seriously in 2008. I started work around mid 2003, so those 5 years until 2007 are like my lost years


The breakdown over the years

2008: $53k
2009: $50k
2010: $50k
2011: $53k
2012: $29k
2013: $25k
2014: $68k
2015: $64k
2016: $67k ?

I haven't close 2016 yet as there's still some weeks left before the year is up, so that's just an estimated figure. To sum it up, I've accumulated about $460k worth of savings over 9 years, ignoring the lost years from 2003 to 2007 where there's no data available. It averages out to be about $51k savings every year. There are good years and there are bad years, and here is the record that I've made in the most recent 9 years.

I checked back on my past records in order to find out more about the lost years between 2003 and 2007. I should have about $100k to $120k accumulated over about 4.5 years, since I started work in mid 2003. That means I save about $25k per year during that period.

How did I double my savings rate?

On reflection, I think the best thing I did was to buy an freaking expensive whole life plan. I wasn't financially literate back then and I was like a sheep out for slaughter. If I remember, the plan will cost me about $3k every month to service, and that makes me wake up to the fact that I might be scammed. I sucked it up and took it upon myself to find out more about investments, and this lead to that, and eventually I entered the stock market to pay even more tuition fees. It's silly how I resented the fact that I have duped myself to buy such an expensive whole life plan, but years after that incident, it turned out to be one of the most important inflection point in my personal finance. It's the pain of having been scammed that made me push through the hard work to read up all the stuff needed to understand all about finance.

The second thing was that I started tracking my expenses down to the cent. In the past, I had used the old school method of keying expenses in a notebook in my mobile phone, then transfer the data over to my desktop spreadsheet. In 2012/13, I switched to YNAB and never looked back again. An initial experiment to just track my expenses fully for 1 month lead to a start of a habit that lasted for nearly 10 years now. The thing about tracking expenses to this level of detail, is that it leaves no room for mental accounting. It is what it is. I make it a point to reflect upon the data I've collected every end of the year (like what I'm doing right now), and that lead me to believe that there's only so much room to cut expenses, and so I started looking at a lot more ways to squeeze in more work to earn a higher income. This lead to a series of actions to slot in more work and up my game.

Where did all my savings go to?

Adding up all my savings in my 13 years of work, it'll amount to $580k of my life energy. Not a small amount! It was quite a shock to see the figures like that. I'll show you roughly my breakdown below. The disclaimer is that it's really a rough figure, and while I tried my best to trace out what data I can especially during those years without proper record, it's highly possible that I could have missed out a few details. My aim is just to see where my hard earned savings went to.

1. About 41% goes to my portfolio, warchest and emergency cash

2. About 14% goes to cpf

3. Another 18% goes to renovation and furnishing of my flat

4. Home related expenses like downpayment and option takes up 9%

5. 6% is lost away plus bad debts (don't ask me that)

6. Down payment of cars takes about 4% (monthly expenses and installments is under expenses)

7. Another 4% is for partial capital payment for HDB to reduce the loan quantum

8. The last 4% is just a big fat unknown.

I add up all those categories as best as I can, and it more or less tallies with the $580k, so it's fully accounted for. The 4% big fat unknown could be things like headphones, guitars, games, computers, handphones and other stuff that I now classify under 'play fund'. These are the assets that I didn't include in my networth calculation because realistically, nobody will really buy them. It should also include money spent on vacation, also one of those things you use your savings on, but never really reflected in the asset part of networth calculation.

Is that okay? I guess so. I realize I don't have a lot of bad habits financially, so a bulk of my savings is invested in assets. Housing is one big part where I might have gone a little overboard, but it's also a place where I spent a lot of my time in.


What's the difference between expenses and allocating your savings?

Savings = Income - Expenses. We save so that we can use the money in the future, for fulfillment of both short and long term goals. Some people might save up for that nice bag they wanted to get for themselves, others might be saving up for that dream car. You can also save for retirement, so that you have a sum of money to draw down years down the road. Something one off. Expenses are usually more immediate and is chronic, so things like food, bills, even insurance premiums, pocket money for parents, all these are classified under expenses for me. You can even see expenses as spending from your cash flow while allocating your savings is more like spending from your balance sheet. I'm not an accountant, but I think the concept is similar to capitalised cost. I stand to be corrected.

I generally use my savings to advance my goals in life. If I'm a company, savings are like my retained earnings. You distribute some as dividends to reward yourself, but not excessively, so that you can continue to do the same good work you've been doing. Some of it you use it to buy other assets so that it can generate future earnings. If you don't know where your retained earnings go to, then you're not utilizing it the best it should be. I will use my savings to purchase financial assets so that it can continue to generate income for me to prepare for the eventuality where my human assets can no longer generate income for me.

That's my goal and I use my savings to advance it. And that's how I intend to do so until the goal is reached.

Could I have done things differently?

My wife saw me typing this and asked me what I could have done differently. I don't usually think things like that, but I gave a few ways:

1. I would have gotten married as soon as possible and get a flat as soon as I can

The rationale is that housing prices kept going up and it disadvantaged conservative people like me. If I got into a property without ensuring a certain amount of savings first, I could have been debt free by now. My flat could have been cheaper by 100k to 200k if I had bought it a few year earlier. But we also see cases where couples getting married when both are not ready or their mindset is not aligned, so they break up before they even get the keys to their flat. I don't think I would advice anyone to just get married and get a property asap - it's plain irresponsible. My wife added that we might end up in divorce if we married any earlier, because she is not the same person back then and I'm not the same person right now.

2. Start gearing up when I start work in 2003 to reduce/remove that lost years

I took 4.5 yrs to save 100k. Thereafter, it only took me about 2 years on average to reach the same amount. Why? I was putting so much limiting beliefs on myself that I have to break it one by one. That first 100k is the hardest amount I've ever saved because I've to learn how to have that mindset through trial and error. At the end of the research needed to write this post, I am thinking how great it was if I had shortened that journey. Imagine I could have saved another 150k to 200k if I had started tracking my expenses way way earlier! This is hindsight analysis and is just pure fantasy, I know, but one couldn't help but wonder. I alone knew that certain mindset is honed by battle, and even if there is a mentor to guide me on how to gear up my work, I might have a million excuses to avoid taking action. The teacher might be there, but the student is not ready to receive, so that's that.


In summary

I'm not here to preach about savings. I already know that if the reader is not ready, he won't even be here to read this. Or it wouldn't have that eureka moment where all things clicked inside you. I'm really doing it for myself, as a chronicle of what I had done and/or what I should have done. I have my own family with a kid coming soon, and I'm doing pretty decently in a job that I really like, have a roof over my hand, have a lao pok (old and used) car to drive around, and also building up my portfolio to generate dividend income for me. There's a tremendous sense of satisfaction and achievement in seeing the long term plans fall into place through careful planning, hard work and meticulous use of my savings.

I suspect that sense of gratitude and happiness is something I can never achieve by using that savings to buy any material things. This is who I am, and this is what I'm going to be. Working hard to save up, one year at a time.