Live within your means – whatever you earn

It is not easy to apply this principle, but this is the key to growing one's savings.

As a writer on personal finance matters, I should be a shining example to all of the benefits of saving regularly. The truth is, like many young people, I have found it a really hard thing to do.

You'd think it would be relatively easy to stick to the principle of spending less than what you earn. But for many young adults eager to join the workforce on the right foot, squirrelling away a small sum of money every month for the proverbial rainy day might not be a top priority. I know this to be true from my own experience and from observing my peers.

After graduating from university a couple of years ago, it felt as though many of us spent a significant sum preparing ourselves for the working world even before the first pay cheque landed in our bank accounts. After scoring an interview for your dream job, you definitely do not want to turn up in a dress obviously bought at a flea market for $20. So there goes $100 for a crisp new work shirt and skirt. And then you shell out another $50 for a pair of new closed-toe heels (I have been told by etiquette experts that open-toe shoes are a faux pas for formal meetings).

And what happens when you do finally land the job? You will need a new bag to replace that old haversack that was lugged to the lecture theatres, of course. Maybe even a classier watch to replace the Baby-G you had been wearing for the past five years. The cash registers at the boutiques in Orchard Road ring loud and long every time a fresh batch of graduates enter the workforce.

The fact is that making an impression costs money. For some, it is about new beginnings and making small sacrifices for big payoffs later. Appearances should not be a preoccupation but the business world can be a superficial one where many decide if they like you within minutes of a first meeting. It is also important to represent your title, company and colleagues well.

From my experience, it is easy to get over the initial horror of a depleted bank account when money rolls in on payday. It feels liberating to finally earn your own keep and, for once, you are accountable only to yourself for what you spend your money on. For me, that was also the start of the slippery slope.

Coming from the banking sector, most of my colleagues seemed to be living it up with their fat pay cheques. I suppose the irregular hours we worked meant we had only one another for company most of the time. At dinner, there would almost always be a few bottles of fine wine. There was also no such thing as a budget for the gift exchange segment at Christmas parties. Once, I saw a Cartier key ring exchanged. It was all rather overwhelming. Of course, I did not let anyone know that because I felt lucky to be welcomed by the group even as a fresh graduate.

The strange thing was even though I knew I was being paid a little more than my classmates from university, my bank balance did not seem to have grown by much even after a year. It struck me that I had become the very personification of the adage: "We buy things we don't need, with money we don't have, to impress people we don’t like."

This also reminds me of a few friends who have become flight attendants. Other than being reimbursed for the risks and time they take to traverse continents, one of the perks of the jobs is, of course, the chance to travel almost anywhere. Some will also tell you that the favourite part of their job is the chance to buy luxury goods in Europe, where tax refunds mean that a Chanel bag could be almost 20 per cent cheaper. They are paid comfortably, but it seems most of their net worth is concentrated in hauls of luxury goods each time they return from Paris or Italy. It is a lifestyle they fear they cannot keep up if they switch jobs, so they remain in it even if the glamour of jetsetting around the world eventually loses its lustre. I have come to realise that it does not matter if you earn $3,000 or $30,000 unless you understand the principle of living within your means.

Though I earn a little less as a journalist now, the irony is that I have managed to grow my savings pool. It helps that the culture here is less flashy. So imagine my relief, two years ago, when my colleagues told me that presents for our annual Christmas gift exchange should not cost more than $10.

"Sure," I thought to myself. "That’s more money to my savings account."

This article was first published in The Sunday Times on October 12, 2014. Reproduced with permission

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