There’s been a very active discussion in the FH Telegram Group – on how much do you need to earn to survive in Singapore.
For some, $100,000 per annum for a family of 2 living prudently is “fair”.
Others were mind blown by that figure and thought that $2,000 a month is enough.
While others though $2,000 per month is “really nothing”.
Given there’s nothing that we Singaporeans like more than complaining about the cost of living – I figured let’s take a closer look at this topic.
The comment that started it all – $100,000 a year for a family of 4?
Now here’s the comment that sparked the whole discussion.
It was in response to this BBC Video on “How to quit work and retire in your 30s”
Here’s the comment – unedited, and in its full glory:
“[Need to save] 25x ur annual spending in investment. Assuming annual spending 100k pa for a family with 2 kids living prudently. Fair? That’s 2.5m into investments. How many avg Singaporean have that by 30s to invest?”
To break it down a bit.
The BBC video says that once you save up 25x your annual spending in investments, you can consider retiring.
The reader assumed a cost of living of $100,000 per year for a family with 2 kids.
Working backwards – if you have $2.5 million in investments, and the portfolio returns 4% a year.
That’s $100,000 a year in investment returns a year – exactly what you need for living expenses.
And therefore enough to retire.
The reader then questioned how realistic this was.
How much do you need a year to survive in Singapore? Is $100,000 a year too much?
As is the case with social media.
This sparked some outrage.
Here’s one gem for laughs:
“Wah 100k!!! You have 2 maids, 2 cars, 2 dogs, 2 kids,noisy wife, a small goat farm , chickens running ard ah”
Another commenter agreed the $100,000 a year was unrealistic.
He suggested reducing yearly expenses to $60,000, saving up $1.2 – $1.5 million, and retiring in the 40s (while leaving nothing for kids):
“That’s why if you get a 5% p.a and reduce the expenses to 60k, with a 4% drawdown, probably can retire in 40s. And more importantly, leave little to nothing for the kids, ha.”
Can you survive in Singapore on $2000 a month?
The comment about surviving on $2000 a month sparked a lot of heated debate, with very diverse opinions.
Here’s a snippet of what was discussed:
“I spend only 2k for family of 3. Things can be affordable if you are not choosy.”
“The 2k/mth is referring to debt free from mortgage. For car and maid expenses, it’s a luxury option. To retire/FIRE, I would say one would have more time to travel and do household chores. 2k is quite doable if u include a few cai fan in a week, clean self-made salad diet to stay healthy in check. Workout like badminton/running outdoor and swimming doesn’t cost much.”
“Ya. Think of normal spending in general with small buffer, 2k per adult is really ntg. It’s like net spendable income of 2.5k after cpf only. That’s not even middle income”
“U think 2k only can afford car meh? Fully paid one mayb”
“Do you really need a car in Singapore? Your life will be easier if you know what are needs and what are wants”
“mortgage should be payable by cpf for most people. I think 2k net spend in cash per adult probably ok to survive. Mini frills in life”
“Seriously? Isn’t that’s a realistic and sustainable amt right? Assuming mthly 2k per adult living cost , 1k per kid all edu & enrichments, 1k insurance, 1k travel budget & miscellaneous. Don’t even have budget for mortgage & car leh?”
“He could live with 2.5k monthly without car”
“yes I can easily spend 30k a year”
What is a reasonable cost of living in Singapore?
So the above is what Singaporeans (in the Telegram Group) seem to think.
I googled the question to see what Google would turn up.
Here’s Expatistan, which calculates the cost of living for expats in cities all around the world:
Summary of cost of living in Singapore
- Family of four estimated monthly costs: SGD $10,683
- Single person estimated monthly costs: SGD $6,826
- Singapore is the most expensive city in Asia (1 out of 14)
- Cost of living in Singapore is more expensive than in 94% of cities in the World (11 out of 166)
Oof.
Using these numbers, the $10,683 a month works out to about $128,196 a year.
Which is even higher than the original commentor which suggested $100,000 a year.
With these numbers the website concludes that:
- “Singapore is the most expensive city in Asia (1 out of 14)
- Cost of living in Singapore is more expensive than in 94% of cities in the World (11 out of 166)”
Biggest component of the cost of living calculations is rent at $4,000 – $6,000 a month
That said if you dive into the numbers.
You’ll find that the Expatistan website assumed $4,000 – $6,000 a month in rent.
Okay while that may make sense for an expat family with 2 kids.
I suppose most Singaporeans can get by with less.
If you assume a lower rent / mortgage of about $1,000 – $2,000 a month.
It brings the total number down to about $6,000 – $8,000 a month.
What does AI think? How much do you need to survive in Singapore?
In my quest to further refine the cost of living in Singapore.
I decided to plug the question into Perplexity AI.
Here’s what the AI came back with:
Monthly Expenses
The estimated monthly expenses for a family of four in Singapore range from approximately S$6,400 to S$11,000, depending on lifestyle and location. Here’s a breakdown of key costs:
Housing
- Rent is typically the largest expense, ranging from S$2,000 to S$4,000+ per month
- A 3-bedroom HDB flat in the suburbs costs around S$2,000-3,500
- Condominiums are more expensive, starting from S$4,000-5,000+
Food and Groceries
- S$800-1,200 per month
- Eating at hawker centers can reduce costs significantly
- Grocery shopping at local supermarkets is more affordable than high-end stores
Transportation
- S$300-500 per month for public transport
- Owning a car is very expensive and not necessary for most families
Utilities and Bills
- Electricity, water, internet, mobile plans: S$300-400 per month
Education
- Public schools are affordable for residents/citizens
- International schools are very expensive, from S$1,500-3,000+ per month per child
Healthcare
- Basic insurance and occasional medical expenses: S$200-400 per month
Entertainment and Miscellaneous
- S$500-1,000 per month, depending on lifestyle
Income Requirements
To comfortably afford these expenses:
- A household income of S$10,000-15,000 per month is generally recommended
- The average wage needed per working parent is around S$5,000-7,500 monthly
Cost-Saving Tips
- Live in suburban HDB flats instead of central areas or condos
- Utilize hawker centers and cook at home to reduce food costs
- Use public transportation instead of owning a car
- Take advantage of free public spaces and activities for entertainment
While Singapore is an expensive city, many families can live comfortably on more modest budgets by being mindful of expenses and lifestyle choices. The key is balancing housing costs with other necessities and prioritizing spending based on individual family need
And you know what?
I actually really liked this answer from the AI.
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My personal views? How much do you need to earn to survive in Singapore?
As the discussion in the Telegram Group suggests, it really depends on what kind of life you are looking for.
There’s just no right or wrong here.
If you are frugal, $2,000 a month is definitely workable.
If you want to live it up, $2,000 a month doesn’t go very far, and $8,000 a month may be a more accurate number.
For what it’s worth I actually really liked the answer from the AI:
The estimated monthly expenses for a family of four in Singapore range from approximately S$6,400 to S$11,000, depending on lifestyle and location.
It’s definitely not perfect and you can get by with more (or less).
But it’s a good starting point to work backwards into the cost of living that’s reasonable for you, once you look at all the line items the AI considers in coming up with this number.
For example if your rent / mortgage is cheaper than the $2,000 to $4,000 the AI uses, or if your mortgage is fully paid off – just adjust accordingly.
Or if you enjoy dining out regularly, increase the expenses accordingly.
If owning a car is important for you, adjust accordingly.
And so on.
A reasonable comment from another reader – on the cost of living
To put things in perspective, there was a very enlightened (and sobering) response from one commenter:
“My humble view as follows;
- Inflation is definitely a problem in Singapore. However this phenomenon is not only in Singapore but all over the world.
- Let’s not forget that Singapore is a small city with no resources, not even water. If countries like Malaysia or US can’t do much to help lower the cost of living in their country, don’t you think we are expecting a lot from ours ?
- Are we creating jobs with higher pay ? Do we have high unemployment rate ? Look at some of the countries around us, Malaysia, Thailand, Taiwan, etc..their pay has not kept pace in the last many many years. Do you know it’s painful for them ?
- Have we ever reflect on ourselves, what can we do to earn and make our lives better instead of complaining?”
What does it take to quit work and retire in your 30s? As a Singaporean?
And just going full circle.
The video that sparked off the comment from the first reader on saving up 25x your annual expenses in investments?
Here’s what it was about:
FIRE Movement Overview
The FIRE movement encourages people to save aggressively and invest wisely in their 20s and 30s with the goal of retiring much earlier than the traditional retirement age. Followers of FIRE aim to achieve financial independence by their 30s or 40s, allowing them to pursue their passions without the need for a conventional job.
Key Strategies
- Extreme Saving: FIRE adherents typically save 50-70% of their income, significantly more than the average person.
- Frugal Living: Practitioners often adopt minimalist lifestyles, cutting expenses drastically to maximize savings.
- Smart Investing: Most FIRE followers invest heavily in low-cost index funds, aiming for long-term growth.
Challenges and Criticisms
- The FIRE movement has been criticized for being unrealistic for many people, especially those with lower incomes or living in high-cost areas.
- Some argue that the extreme frugality required can lead to an overly restrictive lifestyle.
- Critics also point out that early retirees may face challenges if unexpected expenses arise or if their investments don’t perform as well as expected.
Alternative Approaches
The video likely discusses variations of FIRE, such as “Barista FIRE” or “Coast FIRE,” which involve working part-time or in less stressful jobs after achieving a certain level of financial independence. While the FIRE movement has gained traction, especially among tech-savvy millennials, it’s important to note that it requires careful planning, discipline, and often a high income to achieve successfully.
Is this a realistic goal for Singaporeans?
Love to hear what you think!
This post is written on 13 Sep 2024 and will not be updated going forward. My latest views on markets, my Stock watchlist and full Personal Portfolio, are shared on FH Premium.
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What is the point of “FIRE” at 30s 40s when one have only 2,000 a month?
I guess it really goes back to one’s priorities. Some may really dislike work and want better control of their time, even at the cost of lower “income”.