I see articles about optimizing expenses and how it will quickly hit a floor/minimum, because there is only so much we can reduce our spending. It is true. At the end of the day, we need to spend on essentials like food, transport and utilities which we are unable to cut out of our lives.

Nevertheless, the practice of budgeting (You Need A Budget) and tracking expenses have given me good insights into the kind of expenses that I can cut, and yet still maintain an extremely comfortable way of life. It basically allowed me to give myself tiny pay raises over the years.

These small streams of expenses add up rather quickly. Let me share a few simple examples of what I did that many can also do.

SIM-Only Plans +$20

Since the Samsung S4 launched in 2013, I have stopped buying flagship phones. No doubt, they offer top-end specifications but I’ve found that mid/high-end phones work just as well for me. I used to re-contract and then sell the phones for cash.

With the proliferation of SIM-only plans, I’ve reduced my telco subscriptions to $25.35 monthly from $40+ in the past. Nowadays, I use mid-range phones that cost $300+ and a small tip for Android phones is to get one with the stock Android e.g. Xiaomi A2 which minimizes bloatware that takes up precious space and slows the phone down.

StarHub TV +$50

Internet speed and infrastructure have improved drastically over the years. Optical discs for music and movies are going the way of the extinct dodo bird. Subscribing for StarHub TV stopped making sense as my wife and I watched less and less TV over the years.

Netflix is the way to go for me now, plus there are many free channels (especially Taiwanese) on Youtube too. Shaved another chunk of money by ditching StarHub TV.

Ohm Energy +$20

Enough has been said about Open Electricity Market. I went with Ohm Discount which is basically 25% off SP tariff rate. Regardless of whether rates go up or down, I win. Pretty fitting for an index investor huh? Another $20-$25 off per month there.

Edit : OK because you asked, my ref code is OHMREF49DFDE for $20 off. Ohm good ah? I don’t know. Haven’t even gotten my first bill. YOLO? 😉

Hair Cuts +$5

I have been going to the same salon for hair cuts for close to twenty years. Haha! I know, it has been a long time. Regulars get a good deal. Pay for 5 hair cuts up-front, and get the sixth one for free. Averages out to another few bucks each month.

Depressed Monthly Savings Rate (vs Reality)

As my income increases, I have tried to get my expenses to remain stable, if not lower. Not exactly an easy task, but I try to compromise between optimizing but I don’t impose this strictly on my loved ones. Oh yes, believe me – I have many items that I can’t cut out of my life too. Bit by bit, I try.

On the other hand, I’m noticing friends/colleagues/peers heading in the other direction which is what human nature is inclined towards. I’m hoping to avoid getting into any subscription-based payments e.g. gym, Spotify, Grab etc. A positive effect of this is that there is nothing for me to cut away eventually if I don’t have it in the first place.

Looking at my monthly expenses, it isn’t exactly considered low by my standards. Based on my monthly take-home pay, only about 25% is going towards savings and investments. Ouch.

One reason for this seemingly low savings rate is because of certain factors that are not entirely within my control e.g. household expenses, allowances for parents, medical stuff and insurance etc. I have also factored in sinking funds for expenses (especially big-ticket items) that will occur sooner or later but not on a monthly basis e.g. annual income tax, Chinese New Year, new computer, household appliances (TV, fridge, washer/dryer) renewal, optical, dental, family events and travel. This means that my “expenses” hasn’t necessarily been spent yet. At least I can park them somewhere to earn a little interest.

My (preferred) way of budgeting is extremely and deliberately depressing on monthly savings rate, but I feel safe and secure that I have covered all angles. The good thing is, this also means that all income from bonuses are 100% free for deployment into savings/investments. I’ll survive even if I don’t get any bonuses! (and it feels awesome) Personally, I’m also inclined to include CPF as part of my savings because I prefer to take a holistic view on retirement and consider CPF as one of my core pillars.

Monthly Perspective – incl. CPF Employee and Employer

If I consider CPF in my monthly calculations, then my expenses vs savings is roughly an equal 50/50 split. That doesn’t sound too bad!

“Expenses” = 51%
Savings Rate (Cash) = 17%
Savings Rate (CPF) = 32%

Perhaps another idea is to take an annual perspective view. I have written about my net worth over the years, and how it went from negative to positive 🙂

If I divide my net worth increase last year against my annual income incl. CPF, the number I end up with is about 70%. Compare this against my monthly savings rate of 25% – that’s a number that I’m actually pretty happy with. Perspective matters.

Are you going to give yourself any pay raise soon?

Blog News & Stuff

Note – This is a recurring section that is appended to the end of all my blog posts.

  • After a second support ticket with my web host, it looks like bad bots attacks are now under control!
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