Although wages in Singapore has been increasing steadily over the past few years and housing prices have been falling somewhat, saving for a house still seems like a monumental task for everyone except the uber-rich. So how should you save to be able to buy a home by your mid-30s? And are there ‘hidden’ factors you should consider in your planning?
First and foremost is the classic advice of setting a monthly budget and actually sticking to it. Too often, we craft a plan that looks really good on paper only to abandon it a couple of weeks afterwards. The key is to make a realistic budget; start with fixed expenses like utility bills, transportation costs, and existing loan servicing, then top them up with additional expenses and some emergency funds.
In this step, be tough on yourself but also realistic. Forgoing all your hangout sessions may save you a lot, but it may also stress you out. It is better to allocate some money for small luxuries and enjoy it rather than going spartan for a short period of time and splurging after.
The next equally important thing to remember is to stay disciplined with your Central Provident Fund (CPF) monthly contributions. You must pay at least 10% of your HDB’s down payment in either cash or CPF savings, and parting with your CPF is much less painful than letting go of your cold, hard cash.
Moreover, in the long term you can also pay off your legal fees, insurance, and monthly loan instalments through CPF. Ensuring that both your employer’s and your own contributions are channelled into your account regularly may seem painful for now, but you’ll thank yourself for it later.
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