Asked on 24 Nov 2018
How much savings your have at the age of 26? I am 26 now. I have been working for 7.5 years. My saving is around $40k. Is it healthy?
Heng Kai Le, Blogger at diaperfinancingfund.blogspot.com
Answered on 11 May 2020
I suggest that instead of looking at absolute numbers, perhaps you can think about evaluating your $40k in relation to your current situation. A good rule of thumb is to save your annual salary by the time you are 30. So, if you earn $60k a year, you should hopefully have $60k in terms of net worth when you are 30.
Here's a good article to refer to the various benchmarks at various ages: https://www.cnbc.com/2018/02/05/1-in-6-millennials-have-100000-heres-how-much-you-should-have-saved.html
Of course, since we're Singaporeans, we are a tad more kiasu. so see whether you have the grit needed to save up $100k by age 30. ( https://thewokesalaryman.com/2019/06/07/the-most-important-things-i-had-to-do-to-save-100000-before-i-turned-30-in-singapore/ )
but do be kind to yourself and remember that this $100k is an arbitary number. you are not unworthy if you don't manage to save up to this amount. I'm approaching 40, still don't have this amount but am feeling okay. financial wellness is a lifelong journey!
have fun in the process!
Hi, as Kai Le mentioned, the amount is just an arbitrary number.
It depends more on your living expenses and lifestyle.
For example, if someone at your age earns 6k per month and owns a car, condo, etc, even if he have a saving of 100k, its actually not alot given its liability.
For myself, I calculate my savings to be 50% of my income. E.g. Monthly income 3k, I'll save up 1.5k. Its abit hard but possible with the right budgeting and cutting down on luxury goods.
As for the savings, I'll keep 6 months of my income as emergency funds in High Interest Savings Accounts (SCB 2%, no strings attached). This is incase of retrenchment or any emergency needs.
The rest of the amount I'll invest it to generate more passive income. For this, I spilt into 2 parts. 30% in bonds (safer) and 70% in stocks (higher risk higher returns).
*Note: The percentage may change over time when you get older as your risk appetite reduce.
Very interesting question! By the time i finished NS (2.5 years in my time) and university (spent 4 years), I was already 25 years old, and being rather immature and financially unsavvy, had near $0 in my bank account and was basically living with my parents, and spending whatever i earned. So definitely having cash of $40k at 26 is wayyyy ahead of me (and i assume most males). By the time i was 26, i have saved maybe 5k, and this was on artificially-reduced expenses (living off my parents, breakfast and dinner free, some daily consumables paid for like shampoo, body foam)
I think it does sound pretty healthy - additionally the fact that you are conscious about how much you are saving etc probably means that you have targets to hit and probably exercise prudence in spending.
You might want to consider investing as well, given that you are still young and can be less risk-averse.
I think there is nothing much to compare.
The more you compare with the people around you, you reach to two extreme. Either you get frustrated about yourself or you start to get proud of yourself.
Neither is good for your soul.
What's best is to be better than yourself yesterday.
Draft out a goal at the end of the day on how much you want to save.
Work out a plan on how you want to reach there.
Be it increasing income, increasing savings rate, decreasing expense.
All of it will help.
From there look to improve on who you were the day before and you start to feel satisfied with your life.
Long answer short, depends on your lifestyle and hopefully that 40k covers at least 3 to 6 months of your monthly expenses!
Put that 40k in a high interest savings account too. You start investing with the money that you've earned if that 40k covers that monthly expenses that I've mentioned. ETFs, REITS, Unit Trust etc. Diversify diversify diversify!
All the best!
$40k at 26 seems pretty ok!
But I would say instead of focusing on the amount and your age, I would suggest you to focus on how many % of your salary you are saving.
For e.g. if you are earning 4k a month - after CPF deduction (saving 50% of your salary) and you have been working for 4 years (without salary increase through this 4 years and recieve an AWS 13 month AWS and no PB), you should have approximately 106k excluding interest.
The number is just arbitrary like many have said and I think you should look at it relatively instead. How much income are you earning? What does your budget look like every month? You should look into minimising your spendings and paying off debt as fast as possible. Think about going into investments or find an alternative source of income!
Andy Sim, HR Professional at a Financial Institution
Yep that looks like a decent amount! You can probably set yourself a goal e.g. save 100k by the age of 30 or sth, then work towards that goal... decide now much to save every month and you can try putting your money into robos or SSBs to further grow your pot :)
$40k is a good amount to have. I think what you can do now is start looking at how to grow this $40k and make it work for you. I.e. investments. We're both around the same age and I'm dipping my toes into the various investment tools.
Our biggest capital is our youth :)
Yes, it seems like a good amount to have. But please do not be complacent. You must consider other factors such as buying a house, getting a girlfriend/ boyfriend and getting married. As you are still young, it would be a good time to start investing and growing your wealth.
Looks good. I did not even managed to save half of that when I am at 26. I am so glad that you had started off the right path. But I hope you do not accumulate these savings at the expense of gaining experiences such as travelling to see the world.
Now that you have accumulate such a healthy savings, you might want to consider looking into investing. I suggest that you can check out DCA on the STI ETF and SSB.