5 Financial Mistakes That Single 30-somethings Make

Life as a swinging single in your 30s: isn’t it sweet? Your financial burdens aren’t as heavy as that of your married friends, and you have both your youth and earning power on your side.

You probably have a tendency to live it up a little, and, while there’s nothing wrong with that, you should not shortchange your future by indulging too much in the present.

Here are five common mistakes that single 30-somethings make, so you know just what to avoid.

Mistake #1: Not saving for your home

This first mistake is for those who have yet to hit age 35. Since you’re not married, you’ve never felt the need to save for a BTO like many young couples you know. That’s natural, as 35 remains the age when singles can buy an HDB flat. 

But, unless you plan on living with parents forever, you should start saving for your own home early so you have a decent amount of savings for when you hit 35 and are eligible to apply for a BTO or resale flat. 

Given that HDB flats can cost anything from S$200,000 to as high as S$600,000 these days, and prices inflate every year, it’s good to get a head-start on your housing costs as early as you can. 

You will need to pay at least 10% of the flat price in cash/CPF if opting for an HDB loan. If you are getting a mortgage from a bank, this would be at least 25%, which is not a small sum. On top of that, there are also renovation costs you should budget for.

Consider a savings plan if you feel daunted by the amount and lack the willpower to save. It breaks up the savings into manageable chunks and you’ll even benefit from compound interest.

Mistake #2: Not investing in yourself

In your 20s, you may have dabbled a little with robo-advisors to earn some money. But in your 30s, YOU are the single best income-generating asset in your portfolio. 

According to 2018 data by the Ministry of Manpower (quoted in this blog post by Jeraldine Phneah), Singaporeans aged 25 to 34 have the highest salary growth. Men also enjoy additional salary growth potential from age 35 to 39. 

This decade is an important time to invest in your personal capital.

So it’s best not to squander this opportunity! Take your career moves seriously. From finding mentors to trying out side hustles, and even going for upskilling, there’s quite a number of things you can do to boost your career prospects. 

Mistake #3:  Spending like you’re in your 20s

Your married friends are probably spending money on their kids’ education and their housing loan. 

Without the financial burdens that come with raising a family in Singapore, you might be spending a little too freely on lifestyle luxuries like gourmet burgers and expensive gym memberships. 

But the key difference? Your friends’ expenditures are investments into the future, whereas yours are for fleeting enjoyments. 

Now we’re not saying that you can’t or shouldn’t enjoy life, but you should start thinking about the long-term return on investment of your spending when you reach your 30s. 

Try to allocate some of your expenses into assets rather than just maintaining your lifestyle. You could portion some cash into endowment plans which can help to grow your savings. There are short term plans that run for about three to five years or long term plans that can go for as long as 25 years.

You could also choose to channel your money to non-bank savings products which are gaining in popularity these days for their low commitment, high returns model. 

Mistake #4: Putting off retirement planning

Assuming your career spans four decades, by the time you’re 35, it would already be a quarter over. That doesn’t leave you with a whole lot of time to start saving and investing for retirement!

Most Singaporeans already have a basic retirement annuity in the form of CPF Life. It’s the bare minimum everyone should have, but when you factor in rising costs of living and inflation, the payouts you get from CPF Life may not be enough when you reach retirement age.

To supplement your CPF Life payouts, you may want to consider an annuity, or retirement plan

Some retirement annuities are even SRS-eligible. If you’re already topping up your SRS account for tax relief, getting one of these plans would make the most sense. 

Mistake #5: Believing you’re invincible

Your married-with-kids friends are likely to own an entire portfolio of life, health and critical illness insurance to secure protection for themselves and their children.

As a carefree single, you may not feel the need to do so.

But in fact, since you would need to provide for yourself should anything happen, it’s even more important to plan ahead. 

When it comes to your health, you can never really be too careful. To complement your basic MediShield Life, you might consider getting an Integrated Shield Plan which will give you additional benefits on top of the base coverage.

Consider getting critical illness coverage as well, either as a standalone plan or purchase it as a rider on top of your life insurance. This would help with income loss if you become too ill to work later in life.

Lastly, we’d suggest not to overlook disability insurance. The government’s new scheme, CareShield Life, has just launched and it matters even to the young and healthy. 

Similar to MediShield Life, there’s also the option of increasing your benefits and payouts with Supplement plans, which are payable by Medisave. 

We’ve compiled all the relevant information into our PolicyPal CareShield Life Guide so you can have all the information in a booklet!

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