Monday, September 8, 2014

What to do if your savings were wiped out after marriage and paying off loans?

I had a comment from a reader on "My financial goals" page today. This comment reflects the reality of living in Singapore.

Here's the comment:

"I am an engineer, turning 30 this year. After paying off my university and other loans, I am left with nothing in my hands. I am married, wanna have babies soon. How do I start saving and investing then?"


I believe there are many others who also had their savings wiped out after having a wedding, paying off school loans and even have their CPF wiped out when they buy a new house. I told the reader that I've not been through this stage so I won't understand how the situation is like. But I added on that I believe all of us can start all over again. There are 2 ways to saving more money. One is reducing your expenses which requires some sacrifices and the other is to increase your income. Both have to work together hand in hand.

Of course, after marriage, most of us will want to have babies as what the reader also desired. Having kids will surely increase your expenses and I would say there is no way to predict how much it would cost to raise a kid up. However, I would not suggest anyone to not have kids just because he or she has no money. I'm in no position to suggest that at all and if I'm in similar situation, I may also want to have kids of my own.

I'm sure there are some of you who've been through this situation before who can give a better advice on the situation above. So did you manage to start saving and investing again? Feel free to share and comment below if you've been through this stage or is going through this stage now.

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  1. This is what I told my young married colleague with one kid when we chit chat over lunch about investing. So far, he only "invested" in one stock and is badly burnt and not sure how to do it again. Sometime a bad start is a good start for newbie.

    1) Set a side at least six month of emergency fund. (This fund can help to minimize the need for forced selling. Forced selling is a loser game for a long-term investor)

    2) Have different bank account for investment. Never spend a single cent from this investment account. Every month must transfer some money to enforce investing discipline. It can be just like $50. But, die die must do it.

    3) Investing starts with capital. Jan 19, 2015 will be better for long-term retail investor.

    1. Hi Uncle CW,

      Thanks for sharing. I agree with all your 3 points. It sums up the foundation of financial planning. I'm sure other people here will benefit from your sharing as well. :)

  2. The principle is simple and no matter when to start.
    1) spend less than earned
    2) read a lot and build own investment strategy
    3) start with small because most likely tuition fee is required

    1. Hi Ah John,

      Good advice. Its always good to start small and start somewhere regardless of our situation.

  3. I didn't wipe out my savings after marriage and two babies, but in my younger years, I did hit a low of having only $50 in my bank account.

    Solutions I can vouch for include:
    1. Spend less than you earn
    2. Set up a budget and follow it strictly
    3. Hold back impulse purchases
    4. Learn to save and invest conservatively, for a start

    1. Hi,

      Thanks for your inputs. I see that to start saving, it requires discipline. Its a common path we have to go through in order to accumulate from somewhere.

  4. All of know the answer.. spend less than earn, set aside emergency sum, budgeting, delayed gratification.. all common sense not rocket science.

    But the problem is time. With little remaining sum each mth after expenditure on self, household, kids related, how long will it take to build up sizeable investment fund? How long a wait before he can start investing? And how long will it push back the planned time to quit the rat race? How to semi retire by 50?


    1. Hi CSCCC,

      If that's the case, the only way is to increase income since can't really reduce expenses anymore. If not will always be stuck in the rat race.

  5. When I got married in 2000, I had to borrow money from my parents to buy my humble abode. I worked hard and salary started to rise for me to live comfortably over the next five years. We spent little and travelled only to Malaysia once in a while. We saved enough for a private condo by 2004 which TOP in 2006. We climbed the corporate ladder even faster and bought started to enjoy overseas trips. In 2010 we sold the humble abode and invested in 2 commercial properties. Now passive income allows us to be financially free. I believe for those like me who start off financially disadvantaged, it is important to build up a cash stockpile in the early stages. Then invest wisely for passive income and break out of the rat race.

    1. Hi,

      Thanks for sharing your story. From what I see, you manage to reduce your expenses in the beginning while at the same time look for ways to increase your income. Also, you went to seek for passive income when you had accumulated a substantial amount of money which allowed you to break out of rat race. I'm glad it all worked out for you. I'm still learning and on my way to it.

  6. Hi SGYI, I am practicing the following :
    1) Setup Bank Accounts
    a) A daily expense account.
    b) A force saving account (eg POSB MySavings)
    c) A Joint saving account emergency fund
    2) Track the family expense (daily), and review monthly for a start then quarterly.
    3) Summaries all your Insurance Policies to know the family coverage as well as monthly premiums.

    The idea of having few bank accounts is to build up different bucket of funds before even talking about investing. Account B is for building up one's saving discipline by auto transfer from A (which should linked up with one's monthly salary), aka "Pay Yourself First".

    For points 2 and 3, (I am using Excel for ease of updating/working), both are suppose to assist one for budgeting. Cut down on those wants, but maintain the needs.

    More tracking is needed once investment and Children(s) come into picture. Then, create another Excel to have an yearly overview which includes :
    (I) Savings
    (II) Investment
    (III) Expense (inclusive of insurance premiums)
    (IV) Children Education Fund
    (V) Housing Loan (Optional - as I use this to remind to pay up ASAP)

    I started above method in 2001, after the AFC. Hope it helps your reader

    Best Rgds ....... Kent

    1. Hi Kent,

      Thanks for your detailed sharing. I'm sure it will benefit others as how it has benefited me. It seems like the need for money management skills increases when we have a family and kids. Managing a one person's finance is much more easier than managing a family's one.

  7. The key first step would be to do the expense tracking mentioned above.

    Then find out those items which are nice-to-have but take a big chunk of the expenses. Ideally, these would be monthly recurring items which once you cut, will lead to long-term savings (e.g. your broadband/cable/mobile plan, use of air-con, Coffee Bean, weekly cafes/restaurants etc).

    Usual areas to cut include land-line if you still have, cable if don't really watch, replace air-con with fan unless on really hot days, downgrade mobile plan if don't really use so much data (children can start off with pre-paid first). Stretch replacement of mobile phones (buy a new battery instead, upgrade the OS yourself if you know how etc).

    Overseas holiday can cut - e.g. less luxurious free and easy (I go to where you can check when a hotel was built or renovated, lower class hotels are usually nice as long as they are newly built/renovated).

    Use internet reviews to find best food in Singapore that are not expensive (hawker stalls or even air-con places that are not full restaurants) - treat it as exploration and fun activities to find these new places. For Coffee Bean, may be cheaper to get you own good quality powder and filter your own in the office and end up with better coffee. Etc. Etc...

    1. Hi,

      Wow, thanks for all the good suggestions. Kudos to frugal living :)