Kate February 2, 2017

Justin from Root of Good recently published an article on how his family of 5 managed to live for under US$40,000 a year.

Dave and I are followers of his blog and needless to say, we were extremely impressed on how they managed to achieve this, despite the fact that they have 3 kids (yes not one, nor two but three!!!) and managed to take several international vacations (including three Carribean cruises and a summer trip to Europe!) Just how crazy is that??

Nevermind that this is in the US (although the cost of living there is not cheap either, compared to Singapore), they have no mortgage, and they need not spend a tonne on ridiculous enrichment classes for their kids. But then again, it takes a tremendous amount of discipline and tenacity to stick to those figures. Check out the part where they actually spend US$577 on dining out for the past year.

Nearer to home, Thomas from My15hourworkweek and his wife (no kids) spent a total of SG$52,000 last year collectively. This is actually quite a modest amount for a married couple of two and considering that they have to pay SG$11,000 worth of mortgage a year and a further $5000 as parents’ allowance. Thomas is setting up a budget of SG$42,000 spending for this year and I will be very excited to read his monthly expenditure reports and see the adjustments that he will be doing to keep to this final figure.

Dave and I were having a conversation about these two scenarios and trying to juxtapose their examples into our situation. Obviously it will not be that straightforward but since we have been keeping track of our expenses for quite while, we kind of know where our money went.

Expenditure was much higher in the month of January than the previous months, particularly because of Chinese New Year and our Ang Pao outlay was collectively more than SG$1500. (We gave pretty huge Ang Paos to our parents and siblings.) In addition, we had a few reunion dinner gatherings and we took the initiative to pay for them (since we were the eldest child in the family, yes for both sides). That set us back by another SG$600-700. Oh yeah, there’s the parents’ allowance too, which is about SG$1,200 (that’s a monthly fixed expenditure). So you can imagine, we had easily spent more than SG$6,000 collectively last month!!!

In addition to those, in the upcoming months, we have our insurance premiums to pay for. My personal premiums are about SG$3,000 a year. My sister and I signed up our parents for a premium a few years back and although we are splitting it, it would still be about SG$3000 for them. In addition, there’s also Dave’s and Ally’s premiums, which is an additional SG$3000. So we are spending about SG$9,000 in this category.

If we were to tidy up our fixed expenditure for the year, it will be approximately:

  1. Parents’ allowance: 1200 X 12 = SG$14,4000
  2. Insurance premiums: SG$9,000
  3. Utilities (including internet and conservancy charges for our apartment): $100 X 12 = SG1,200 
  4. Newspaper subscription: $30 X 12 =$360
  5. Ally’s daycare charges and miscellaneous fees: $400 X 12 + $200 = SG$5,000 

Total: $29,960 

I won’t be including our mortgage here since we are paying for it via CPF and not topping up with cash.

I am not including our income and property taxes here yet and will include them when the taxman sends us our forms.

We do not own a car so we do not have the monthly installments and all the parking and related taxes to think about.

To be honest, I was pretty surprised by the numbers myself now that I am taking a closer look. The bulk of the expenditure definitely goes to my parents allowance. However, that is one portion that I do not intend to remove nor lower (unless perhaps I no longer have a job).

Now that we have the numbers in perspective, how much is a good figure to strive for?

Dave and I have this magic number of an annual spending of $60,000 for a family of 3. If so, that essentially means that we are budgeting about $30,000 for our  collective spending. That would mean $15,000 for each of us and an average of $1,250 a month. Considering that we are planning for a trip to Bali in March with Dave’s family (altogether 7 of us and he will be splitting the cost with his brother), that could essentially means that we have less to work with. Depending on our spending patterns, we might want to budget for another trip towards end of the year.

Well, I’ll be very excited to see how we can make it work. Already with my clothing ban this year (and yes, I have decided to implement a clothing shopping ban for Ally too!) and our more mindful spending with our minimalism lifestyle, we have stopped many impulse purchases.

We have also dine out a lot less during the weekends (unless they are gatherings with friends etc.) and spend less on dining out.

SG$60,000 is not a small sum of money and in fact, many Singapore families probably survive on that amount or probably less than that. And if we were to spread it out over 12 months, it is an average of SG$5,000 a month.

We have set the budget! Next is to make it work!