young and savvy

Keeping to a budget of $35 a day

I've switched to cheaper food and transport but insurance and charity stay untouched

When you are trying to get by on $35 a day, the once routine act of getting a taxi to work starts to look awfully like an indulgence.

A cab ride from my home to the office costs only about $6 but that's 17 per cent of my daily allowance so it's the bus for me these days - at a paltry 83 cents a trip.

This is just one aspect of an austerity drive where I try to rein in my daily spending to that daunting $35, which is in the ballpark of the $32 daily budget that I arrived at in the Young & Savvy column two weeks ago.

Young & Savvy

I calculated that this figure would allow a person starting work at 25 years of age to hit $100,000 in savings and investments by the time he was 30.

But it has been an uphill struggle - reflecting reader comments after the article that it would be tough to live on such a budget.

My personal plan has been to spend less on weekdays and relatively more on weekends, hitting $35 a day on average. I want to make it part of my lifestyle so I can carry on like this through force of habit.

It is still too early to say if I can make the average consistently but there have already been some lifestyle changes, most notably after I downloaded an application on my mobile phone to record my every purchase.

This makes me realise when I've spent too much on wasteful items and so is helping me to change my spending patterns.

There are now times when I quench my thirst with plain water or tea that I've brewed myself after seeing how many $1.20 soft drinks I bought on one day.

I'm also starting to get used to hawker centre food rather than air-conditioned restaurants.

When I crave fish and chips, I shell out about $6 at Western food stalls in hawker centres - a real saving from the $14 or so I would have to pay in a mid-range restaurant. Plus, I would have to pay 7 per cent in GST and a 10 per cent service charge in restaurants - often for service that is mediocre at best.

These changes have come pretty easily as I'm not a picky eater but it's been harder when I try to save money on transport.

I used to wake up later and grab a cab to wherever I wanted to go, but I am now sacrificing a good amount of sleep to set off between 30 minutes and an hour earlier so I can take public transport.

It's a big struggle whenever the alarm rings every morning.

But so far my willpower has prevailed and I've generally climbed out of bed on time.

Admittedly, it adds to the irritation of being packed like sardines with the crowds, especially when I have to travel during peak periods.

On many occasions, I've yearned for the times when I would be guaranteed a seat in a cab and could sleep during a long journey.

There has also been some criticism, most notably from my friends who question me when they notice me typing in on my phone every single dollar and cent I'm spending - even the amount deducted from my ez-link card after I step off the bus.

There can be 10 to 20 transactions a day and I don't miss any.

My family members have been similarly flabbergasted when they learnt of my expense tracking.

"Aren't you crazy, tracking every single cent like this?" goes the common refrain.

I try to explain but most of them still think I'm going overboard.

Effort is worth it

But all these changes and irritations count for little compared to the satisfaction I feel when I calculate how much I'm saving.

A quick estimate shows that I can save an additional $350 a month alone just by switching from taxis to public transport.

I've been reducing my cab rides steadily in recent years, and my campaign has given new energy to this effort.

Some people question whether such painful saving, dollar by dollar, will dramatically improve my finances.

"It's when you stop taking risks that you'll never be a millionaire - that is, sticking to your job and saving diligently to get to $100,000," said one reader in an e-mail response to my article two weeks ago.

But I take encouragement from people who have managed to retire early because of their thrift, such as well-known US blogger Mr Money Moustache - first name Pete - who declines to give his surname to protect his family's privacy.

He retired at 30, although both he and his wife had only normal salaries.

"Your current middle-class life is an exploding volcano of wastefulness," says his blog. "You will easily be able to cut your expenses in half - leaving you saving half of your income. Or two thirds, or more.

"As it turns out, spending much less than you earn is the way to get rich. The only way."

Mr Money Moustache's advice includes cooking at home instead of going out to restaurants and cancelling your cable television service.

While not everyone can achieve his level of frugality, his success encourages me to try to cut spending in any way I can.

After all, Mr Money Moustache has achieved what most of us spend our lives chasing after: a comfortable retirement with the freedom to pursue his hobbies, rather than being stuck in the rat race.

Expenses that can't be trimmed

While it is good to be thrifty, it is not okay to be a miser.

There are many less fortunate people who spend less not because they want to save but because they don't earn a lot. So, even when tightening my belt, I'm going to continue my donations to charities.

I also give an allowance to my parents, even though they don't need my financial support. In short, we should not give up spending money on our loved ones and the less fortunate.

Medical insurance is another expense that is non-negotiable, meant to help with costs if we are hospitalised.

The premiums for my private integrated shield plan - the upgrade of MediShield - come from my Medisave account but the rider premiums of a few hundred dollars a year are paid from my own pocket.

Low-cost term insurance is also good, to cover catastrophes such as untimely death and disability. The plan offered by Aviva to Singapore Armed Forces personnel, including NSmen, has served me well over the past decade and offers basic protection for about $10 a month.

While we should reduce our spending on food, transport and clothes, the basics, such as insurance and charity, have to remain.