The Reality Behind Singapore's Wealth: Empty Pockets and High Pressure
Many foreigners perceive Singaporeans as being wealthy and living a comfortable life. However, this surface-level observation often masks a different reality: many Singaporeans are struggling with debt and financial pressure despite high incomes. This article will explore the reasons behind this phenomenon.
The Illusion of Wealth
High Salaries, Higher Expenses
It's true that many Singaporeans, especially those working in sectors like banking and technology, earn high salaries. However, the cost of living in Singapore is also exceptionally high. Consider a friend of the speaker, who earns a substantial income but is still struggling.
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Apartment loan: SGD 5,000 - 6,000 per month
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Car loan: SGD 2,000 per month
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Kindergarten fees (two children): SGD 4,000 per month
These expenses, coupled with other daily costs, can quickly add up to SGD 15,000 - 20,000 per month for a family. Even with a combined income of SGD 16,000, savings can be nonexistent, leaving many vulnerable.
Credit Card Debt and the Pressure to "Keep Up"
Many Singaporeans rely heavily on credit cards, with a significant percentage struggling to pay off the interest. This is fueled by a cultural pressure to maintain a certain lifestyle and "keep up" with their peers – a concept known as "pa su" (怕輸) in Singaporean Hokkien, meaning "afraid to lose." This manifests in various ways:
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Living in apartments to match social standing.
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Owning cars for convenience and status.
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Sending children to expensive private schools.
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Displaying lavish lifestyles on social media.
This constant striving for a better image can lead to overspending and accumulating debt.
The Cycle of Debt and Financial Vulnerability
Assets Rich, Cash Poor
Many Singaporeans are "asset rich, cash poor." They may own properties and other assets, but their monthly income is barely sufficient to cover their expenses. In some cases, salaries don't even cover all loan repayments, pushing individuals further into debt.
The Housing Market and Investment Strategies
A common strategy involves selling government-subsidized housing (HDB flats) after the minimum occupancy period of five years, profiting from the increased market value. This profit is then often reinvested into purchasing two private apartments: one for personal residence and one for rental income.
Risks and Potential Crisis
The rental income from the second apartment is ideally used to offset the loan repayments for both properties. However, this strategy is risky and vulnerable to economic downturns. If the economy weakens and foreigners lose their jobs, rental income could dry up, leaving homeowners struggling to cover the loans on both properties. This could lead to a potential financial crisis for many Singaporeans.
A Call for Financial Prudence
The speaker emphasizes the importance of financial prudence and contentment. Living in government housing is not something to be ashamed of. Building a stable financial foundation with savings is essential before taking on substantial debt. A financially stable situation involves having a substantial income before deciding to buy an expensive apartment. It's better to save more money than to spend all your money on a expensive apartment that will use up half of your monthly income.
Conclusion
While Singapore may appear to be a land of wealth and prosperity, the reality for many Singaporeans is one of financial pressure and vulnerability. The pursuit of status and the pressure to "keep up" have driven many into debt, highlighting the importance of financial prudence and living within one's means. The speaker hopes that Singaporeans will learn to be content and prioritize financial stability over outward appearances, especially given current uncertainties in the economic outlook.
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