Sunday 17 January 2016

Last year in 2015, another 20k saved, good or not?

Well, another year has come and gone. The previous year, which included the early part of 2015, I had managed to hoard $20k in 9 months.

For the year of 2015, after adding my sums, I have only managed to eke out $20k over the 12 months.


Only $20k? And its over 12 months, a good 3 months longer than the duration I managed to save the same amount last year!

While this year performance has been poorer than the last, there are certain reasons for the decline in performance.

Reduction in Disposable Income

A large part in the reduction of income saved is due to the enrolment in the Employee Stock Purchase Plan (ESPP), which kicked in at the beginning of this year. Since it is a good 10% of my income, my savings will suffer a rough reduction of $320 every month, assuming the graduate average pay of $3,200. That is a $3,840 reduction to my annual savings. Including the CPF contribution (20%) and parents' allowance ($500/month), the maximum I can save would be the region of $20k. Well, I think I deserve a pat on the back for saving almost the maximum a graduate in my shoes would save, assuming he does not spend on miscellaneous stuff like shopping, food, entertainment etc. So some readers might ask, wow, so Dividend Simpleton was like an introvert the whole year, as he didn't spend a cent on this stuff! Well, for my calculations, I did not include bonuses, which might be substantial to some, but for my company, my bonus was paltry at only one month. Well, better than nothing I guess, so I can assume for the whole year, I have spent around one month pay on such stuff. That is surprisingly a lot, but given that I have went for an overseas trip middle of this year, it makes a bit more sense.

Realised Losses

I have also included losses in my portfolio to my savings goal, much like impairment does to the accounting books. This directly affects the amount I have saved, as purchases are directly paid out from my savings account, and a loss would mean that technically, I have saved less. I like to take a conservative view on my finances, hence the inclusion. However, unrealised losses have not been included for the obvious reason that it has not been realised yet.


I have also included this into my calculations. The good thing about income tax in Singapore is that it is pretty on the low side. Even with the reduction via taxes, I would have saved around $20k, which is actually not bad a feat, I would say.


Despite the heavy losses ('impairments') to my savings, I am proud to have managed to save in the region of $20k, which is critical to buffing up my warchest, even more so when cash is beginning to be king in this bearish market.

The habits I have mentioned in the previous post on how much I have saved continue to be practised, such as saving money on food expenses by bring food from home and the like. However, such food and travel expenses are rather small for me, as I don't work in the city and the company provided transport to and from work. However, savings from such expenses may be handy for say people who work in the city, plus just simply queueing for food would have taken a large chunk of their lunch breaks. 

As for travel expenses, with the MRT and the buses making travel so convenient, I don't see why people would resort to taking expensive taxis and private transport to work. Look at the above picture of workers getting to work in Cambodia and we see how fortunate we are. We complain about so many things that many in Singapore have taken for granted. 

We need discipline to make this work, and if we keep succumbing to temptations, then eventually, it affects our attitudes to even our own course of work! We have a goal to work towards, and lets go GET IT!

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