I have been having a few conversations with my friends lately on how much they save on general every month. It seems like it’s difficult for many of them to save as much as they want to on a monthly basis and they don’t keep track of their expenses. I even have a friend who has an unique ability to spend her entire pay in 3 days after it is credited! On an overall average, they save around 10% to 30% of their take home pay. Very financially savvy ones would be able to save up to 80%, but that also depends because they might be earning a higher income as compared to me.
When I tell some of them that I save more than 50% of my take home pay, I see their facial expressions turn into shock or surprise. Then, the next question would be
“How do you do it?!”
Considering that there are many other financial bloggers who are also able to do the same, I didn’t think that this was very difficult to achieve, especially at an age of 27 when you barely have any financial liabilities. I think the key thing to note when you are managing your cash flow is awareness. Knowing how your money enters and exit your pocket would allow you to take charge of it and prioritize your expenses.
I’ve also read this article that utilized this calculator. In the article, there is a table that shows the numbers of years that you have to work before you can retire. If you work by its assumptions, for me to retire by Age 40 (which is in roughly 13 years), I need to save about 60% of my take home pay from now on, which I ain’t too far off!
As ideal as that may sound, it may not be that feasible because my financial liabilities might increase as I grow older. I mean, eventually I might want to have some kids, and those little buggers would be sucking away a big portion of my income, and I may no longer be able to save as much as I am saving now if my income stays the same.
Alright now, let’s get back to my personally monthly cash flow statement.
|Take home pay||$ 2,800|
|Insurance (Term)||$ 120|
|Insurance (ILP)||$ 130|
|Insurance (H&S)||$ 33|
|Income tax||$ 35|
|Daily expenses||$ 500|
- Term plan, H&S plan are charged annually, but I have divided the premiums by 12 to add into monthly cash flow.
- I have opted for monthly giro deductions for my income tax.
- Daily expenses are projected to be limited to $15 per 31-day month, with additional $35 for a round figure of $500.
Okay, fine. If you want to be technical, I actually save more than 50% of my take home pay. The exact percentage is 52.21%. If you’re wondering, my mobile phone bills are tied to my mother’s account as it is part of the M1 Multi-Service Saver which we are able to get a significant discount. The monthly charge is around $40 after the discount and I have added that into the $400 monthly allowance given to my mum.
I live with my parents, and therefore I do not need to rent a flat. I rarely take the taxi, unless I find a need to. I rarely do any retail shopping. Most of my clothes are bought either online, or in bulk when I go for an overseas holiday. :p
If I continue to save at this rate, at the end of every year, I would have savings of $17,544. By not spending my bonuses (roughly 2 months), I would have a total of $23,144 which is actually 59% of my annual take home income! Don’t forget, this does not consider the yearly increment that I would get. If say I get a 3% increment, the next year, I would be able to save another $1008 more if I do not increase my expenses.
It seems like the only expense that I can really reduce are my daily expenses. At the end of every day, I make a mental calculation in my mind to review what I have spent for the day. If today’s expenses exceeded the $15 limit, I will spend lesser the next day to make up for it. In recent months, I have been trying to reduce this limit to $10 per day. It is still possible but I would have to give up on a few guilty pleasures.
Another thing to take note is that my monthly cash flow statement only takes into account my monthly salary. In actual fact, I have other streams of income that would help me to increase my final amount of savings. Of course, they may not be enough to cover my expenses now, but I do hope that they may eventually be significant enough to cover my overall expenses, so that I can accumulate even more wealth over time.
If your monthly income is almost the same as mine and you want to be able to save more, I highly recommend you to chart out your own cash flow statement. Start being aware of your financial health and make some changes to your lifestyle today! 🙂
I’m thinking of doing another blog post for a more comprehensive cash flow statement for my annual expenses. Do you guys think it would be good idea? 😀
Thanks for reading!
Miss Niao xoxo