I am going to ask a simple question: how do you get rich? Well some people have the good fortune of having rich parents, others marry a rich spouse. A few very lucky people win the lottery. Then there are those who simply earn a lot of money. Let's talk about those who do create their own wealth. They become rich by earning a lot of money - usually by being extremely good at what they do. They do not become rich by saving a few dollars here and there. Economizing like that isn't going to make you rich in the long run and that's not what rich people do. I get the feeling that some of my readers don't seem to be able to differentiate between the behaviour of poor people and rich people.
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| Money, money, money |
Poor people would have far less income to spend. Let's put some figures on it: the minimum wage in the UK is currently £6.50 and that is usually for people who use their muscles to make a living (manual labour) as opposed to those who use their brains for a living (doctor, lawyer, accountant, engineer, teacher etc). If you worked 40 hours a week at that rate, you would be paid £260 before taxes and national insurance. From what is left after taxes, you would have to pay your rent, buy your food, pay your utility bills, pay for transport to get to work, maybe buy some clothes if necessary. In such a situation when you have a very limited budget, you would have to make difficult choices - to make your (very little) money go further, you would often be hunting for the cheapest option available. People in this situation usually have no savings and are often in debt.
Hence for poor people in that kind of situation, they need to be very careful with money because they could run out of cash before their next pay check. Many of them are in debt because they are forced to borrow money to make ends meet. Therefore the cost of living is very important to them: how much food costs, how much they pay for public transport, how much their utility bills eats into their disposable income (as well as how much tax they have to pay) has a direct impact on their standard of living. It would mean whether they can afford a little luxury like having a mobile phone or being able to buy a new pair of shoes for winter. Imagine trying to raise a family when the parents are earning minimum wage. I'm not telling you something you don't already know: life is pretty hard for poor people.
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| Would you find an ice cream here affordable or expensive? |
What about rich people then? I'm not talking about the super rich multi-billionaires here, I'm talking about your average skilled professional who uses his brains (rather than his muscles) to make a living here. So people like doctors, lawyers, accountants, engineers and teachers: they may not be millionaires, but with a regular, respectable income coming in every month, they do not need to worry too much about money. They can afford to take their family to very nice places on foreign holidays, go to fancy restaurants and have a lovely meal, enroll themselves in a course to learn a new language, buy some new clothes they have spotted in a mall, upgrade their mobile phones to the latest model, or just log onto ebay and buy something they don't even need just for fun. These are probably things you take for granted - like of course I am going to get that new iPhone, of course I am going to go to the cinema to see the new Hunger Games film, of course I am going to buy my best friend a nice birthday present, of course I am going on holiday this year. You can make such assumptions because unlike poor people, you have the money.
The fact is most of these nice things that we enjoy are not going to break the bank: you can buy some new clothes, go to the cinema, treat our friends and family, take a nice holiday abroad and it is probably not going to bankrupt you even during times of austerity. In fact, many people have such confidence in their continuing ability to earn money that they get a mortgage from the bank to purchase their home. I need to remind you at this stage that we're talking about professionals like engineers, teachers and marketing managers living lives like that - they may not be super rich, but they are comfortably well off and this boils down to their ability to hold down a job and constantly earn money.
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| If you can hold down a job, then you have a constant stream of income. |
This is why when my reader started asking me to compare the cost of living in London to Singapore in terms of how much the average meal in a cafe costs, I'm like, what is the point of that question? After all, a professional holding down a job would be able to walk into any cafe in London and afford to buy lunch without being forced to choose the cheapest item on the menu. No, instead he can simply pick the item that he likes the most and even if that turns out to be the most expensive item on the menu, so be it. Why? Because paying a little more to have the king prawn salad instead of the ham sandwich or having another cup of coffee is firstly, something that the professional can afford and secondly, the price difference between the two items is small enough not to make any kind of dent on his expenses. No, the point is, he can afford it because he has a pretty good job.
That is why I say that you are asking the wrong question by splitting hairs about the cost of meals: yes you can always find a cheaper meal in town, but it is not the cost of food or meals that is going to determine whether or not you are rich, rather it is your ability to earn money that really matters. Firstly, rich people do not need to look for the cheapest options because they can afford to spend more on the nicer things in life. Isn't that the whole point of having wealth? After all, what is the point of accumulating wealth if you have money in the bank but still choose to live like a poor person? In case you haven't realized, you can't take your money with you after you die - so there is really little point in keeping all that money in the bank. Looking at your bank statement isn't going to make you happy, spending the money on nice things however, probably will. I don't know what is behind this Singaporean desire to hoard money, to spend as little as possible. After all, isn't the national hobby in Singapore shopping? What then is the point of becoming rich (or at least comfortably well off) if you are still determined to live like a poor person with a very limited budget?
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| The cost of your lunch isn't going to determine if you are rich or poor. |
In any case, when a poor person selects the cheapest possible options available to him - he is not doing that to accumulate wealth. Rather it is a choice made on the basis of necessity. Saving a few dollars here and there isn't going to amount to much - certainly not enough to make any significant difference to the overall standard of living for the individual concerned. The factors that would certainly make a really big impact are not little things like how much you spend on lunch or pay for your phone. No, what you need to consider is the biggest purchase that most individuals will make in their lifetime: their home. Thus property prices and the availability of cheap housing should be far more of concern to you than the cost of your lunch.
I remember when I was a teenager. The thought of one day buying my own home was always at the back of my head, but I probably had no idea how mortgages worked or even what the value of my parents' home was. It was simply an issue that did not concern me at all at that stage in my life and thus I didn't bother finding out about. However, having lunch away from home was something I did all the time and it was simple enough for me to understand. I knew where I could get cheap food and given that my parents were not that generous when it came to my pocket money, I had to economize. Thus the cost of dining out was a concept that did affect my life as a teenager - it was an activity that I enjoyed with my friends in Singapore back then and I would be concerned if it was going to be prohibitively expensive in another country compared to Singapore. I suppose it is only natural for a teenager to inquire about something that s/he is more familiar with, hence I can see why my reader asked about the cost of living with regards to things like "the average cost of a meal in a cafe" rather than how many years one has to work to repay one's mortgage.
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| Eating out in Singapore is a wonderful and affordable experience. |
When I bought my first property back over 12 years ago, I had to get a mortgage as I simply did not have enough money then. I had to pay interest on the money I had borrowed from the bank, so I worked especially hard to pay off the debt and there were some tough decisions to be made then. For example, if I wanted to spend £500 on a holiday, then I would have to worry about whether or not that money could have been spent repaying my mortgage. There would be a trade off - I could enjoy the exotic holiday or I could clear another £500 from my debts. The longer I took to replay my debts, the more interest I would end up paying on the loan. Fortunately, I had already planned to get on the property ladder the day I started working, so I had already accumulated a little nest egg ready to put towards my deposit. Then for the next few years, I was effectively in debt with my mortgage. I had to be very careful with my money and my strategy was to repay my mortgage as quickly as possible.
When I finally paid off my mortgage, it was like a huge watershed moment. I was no longer in debt and I could go back to spending more money on myself. I no longer felt the desperate need to earn as much money as possible to clear my debts, I could take time off work, I could go traveling, I could relax a lot more. It took me five years to clear my debts after I had my first mortgage - thankfully, I was working in financial sales then and was earning such huge commissions in that role I could pay off my mortgage quickly. Now five years seems like a relatively short amount of time to clear one's mortgage, but it all depends on two mathematical factors: how much you earn and how much you have borrowed. Naturally, in the UK, those who earn less money opt for very modest properties (in either very rural or less pleasant neighbourhoods) which are very cheap and affordable, thus they will not spend the next few decades in debt, paying back the mortgage. Those who are rich can extend themselves further and buy more expensive properties because they can afford it - given the size of the UK, there is something for everyone of every budget.
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| How much does this house cost? That depends on the location. |
Now, compare that to the situation Singapore where people can spend up to 30 years repaying their loans for their HDB flats. Ouch. Local bank UOB has now introduced home loans that stretch to 50 years. That means that if you got your first flat at the age of 30, you would spend the next three to five decades paying off your mortgage. You could possibly die of old age before you have even finished paying off your mortgage in Singapore. That means spending practically all of your adult life in debt-mode, where you have to decide if you spend the money you earn on yourself or whether you pay off your debt. Now that is going to diminish the quality of your life far more than what the cost of lunch is at your local cafe. There is a huge problem in Singapore though - there are hardly any very cheap, affordable properties for those looking for bargains. If you're single, it's probably not a problem that affects you. But what is going to happen when you are married and ready to start a family?
Given the way the population is expected to grow to 6.9 million and even possibly 10 million in Singapore, the situation is only going to get worse as the demand for housing increases whilst the housing stock is finite. Perhaps the next generation will have to get used to living in Johor and commuting daily (that would be subject to agreement from the Malaysian government of course) otherwise you are simply going to see more and more adult Singaporeans unable to move out of their parents' home even after they get married and have children. In 20 or 30 years, it will become common to see 4 or 5 people sharing a bedroom in your typical HDB flat. That may not be such a bad thing if it does mean that you will have more disposable income to spend on the nice things in life rather than spend the rest of your adult life repaying a 50 year loan. This is when the quality of your life will suffer: you're either sharing your parents home with an extended family (and having very little personal space) or spending decades in debt because of your mortgage. Either way, suddenly the cost of your lunch becomes far less relevant to the quality of your life.,
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| How many people can you cram into Singapore? 6.9 million? 10 million? |
The key difference between the UK and Singapore is that of population density. Sure, property prices in London are as high (if not higher) than Singapore in some of the nicer neighbourhoods. There is a lot of talk now about how a new tax (dubbed the 'mansion tax') for properties over the value of £2 million (that's about S$4 million) would disproportionately affect London. It was reported that only 87 properties in all of Wales will be hit by the mansion tax, whilst £2 million in London may get you no more than a modest two bedroom flat in Knightsbridge, London. There is a simply solution for folks who are not particularly rich and want to get on the property ladder: they simply buy a home in a cheaper part of the country. That may mean simply selecting a cheaper neighbourhood 20 or 30 miles away from the city center. Given that we have domestic flights that could exceed 2 hours, moving 20 or 30 miles away from the city center not considered a big deal at all. Conversely, moving 20 or 30 miles away from the CBD in Singapore would land you either in Johor or the sea.
Such is the problem with the geography of Singapore - short of leaving for another country, there is no escape from high property prices even in Tuas or Woodlands. It's fine if you're a rich professional with a good job: you would be able to get on the property ladder fairly painlessly if you are earning enough money to pay it off quickly. But the poor in Singapore who are least able to get on the property ladder are also the least able to move away from Singapore to a country like Australia, America or Canada where property prices are much lower once you get away from the expensive city centers. Such is the paradox - if you're able to move to another country to take advantage of lower property prices, then you probably can afford to buy expensive property in Singapore. If you're unable to afford (or will struggle to afford) property in Singapore, then you're also probably not going to be able to move to another country either. The bottom line is: the rich have little to worry about, the poor are (for want of a better word), screwed.
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| How long do you want to take to repay your mortgage? |
So, if you are really concerned about the cost of living, you should not be looking down at the plate of chicken rice before you but you should be looking up at the roof over your head. How many years is it going to take you to clear your mortgage if you do spend your adult life in Singapore? How many years are you prepared to spend in debt to the bank? And if you are going to live in Singapore, then I wish you every success in finding a very well paid job because you're going to need the money. Do let me know what you think: leave me a comment below. Thank you for reading,
I think in terms of getting on the property ladder, London and Singapore are pretty similar in terms of price, except for the fact that its easier to get and finance a BTO HDB flat in Singapore, whereas trying to get a new build in London is way more expensive.
ReplyDeleteHowever, in terms of eating out daily, I think you can get a larger variety of tasty food at a lower price (hawker centres and coffee shops) in Singapore, compared to eating out in London. Outside of London, it is even worse, as both variety and quality of food is lacking, in addition to a higher price if you want anything remotely tasty.
However, if you choose to cook your own food, its cheaper to cook in the UK, as the ingredients seem generally cheaper to me than in SG, excluding specialist asian groceries.
Hi John, the way I see it, London and Singapore are still different in terms of geography. In London you can move out to the suburbs and the further out you go, the cheaper it gets. You may be familiar with the zonal system of London with zone 1 being the heart of London and zone 2 is the next concentric ring around the centre and we go up to zone 9 - which is the outermost suburbs. Of course anything in zones 1 and 2 are bound to be expensive lah, but all you have to do is keep going further and further out and the price drops significantly by the time you get to zone 9 and you can still keep going beyond that (it would just mean a longer commute into central London if that's where you need to work).
DeleteSo if all you have is say £100,000 to spend on a property, then forget about zones 1 to 4. But once you get to say zone 6, then suddenly £100,000 can get you something and when you get to zone 9 and beyond, you do have a lot more options. Once you get out to one of those commuter towns like Northampton, then your £100,000 can actually buy you a decent looking house that's great for a young family.
In Singapore, yes the price drops as you move from Orchard Road to Toa Payoh to Woodlands but what happens if you still can't afford Woodlands? Then what? Buying a property in Johor Bahru and then commuting everyday into Singapore is not a realistic option since the Singaporean would need some kind of resident permit to live in Malaysia that way.
So I am talking about options here: yes I recognize that the HDB system does help some people get on the property ladder, but it does favour young married couples with children. What if you are single and are not ready for marriage yet, then what? Go to the back of the queue or try the private market. The government does use the HDB system to entice Singaporeans to get married and have kids as that is one of their agendas: deal with the falling birth rate, reward couples who do have children.
Whereas in London, you have options because we have these huge suburbs that spread out across SE England - contrast that to Singapore, which is a small island that is limited in size and a lot more densely populated that London. London may have a bigger population than Singapore but the population density is far lower as there is so much more land here in SE England compared to the island of Singapore.
Trying to buy a new build in central London is certainly expensive but if you can't afford that, then you simply look towards the suburbs and commuter towns where there are cheaper options. However, to do the equivalent in Singapore would involve looking towards Johor Bahru and other towns in Johor - and that's just NOT an option for Singaporeans who cannot afford your average HDB flat. There are schemes to help them - but do you really wanna spend the next 20, 30, even 50 years in debt, servicing a mortgage? No thanks.
Again, on the issue of eating out, I think you're swayed by cultural factors. No you cannot eat hawker food in London, but most Angmohs here don't have any interest in eating Asian food. It may be an exotic treat they enjoy once in a while, but otherwise, they are quite happy to eat what I would consider quite bland and boring Angmoh food (but hey, I'm Asian). In terms of the lower end of the dining options, there are plenty of dining options in England catering for the low end, budget-conscious market: but they tend to involve boring Angmoh options like sandwiches and fast food (hamburgers, hot dogs, fried chicken, french fries etc).
DeleteThe fact is your average Angmoh has a very bland and boring diet - sushi is something that's too queasy for them as it involves raw fish and they find Malaysian-Singaporean dishes like my favourite laksa way too spicy for them to stomach. So the lack of variety of exotic dishes you find in the UK when dining out reflects the rather unadventurous English palette - rather than it being a cost of living issue. If you have a Singaporean palette in the UK, then dining out probably sucks. I know. I live here.
But is this more a cultural issue concerning different cultural norms and cuisines - rather than a cost of living issue? Likewise, if a British expat goes to a Singaporean supermarket and looks for the same kinds of ingredients he would expect to find in a British supermarket and finds a very small selection of things like rhubarb, artichokes and blackberries, then he could turn around and claim that food in Singapore is ridiculously expensive (as he is paying for Cold Storage to fly these ingredients in from Australia or America by air). The solution is simple: eat local. When in England, eat English food. When in Singapore, eat Singaporean food. If you wanna eat Singaporean food in England or vice versa, then of course it is gonna be expensive lah.
I agree with your analysis on housing, but I was only looking at zones 1 to 5 London and Singapore. Outside of city areas, then prices for housing in the UK drop quite a lot, and you are quite right to say that housing then is cheaper in UK (and outside zones 1 to 5 in London). However, I much prefer to live in the city area which is why I said they were similar; prices in zones 1 to 5 London seem similar enough to SG. You are right in SG, HDB policies are used to shape the way people behave, and if you don't fall into their approved catergories, finding affordable housing is quite hard.
ReplyDeleteI would actually wish there was more fast food where I am staying in the UK now, but the best I can find is Subway. What I mean to say is that its easier to find low cost food anywhere in Singapore. If I even had the kind of food options available in London, I would be quite content as well. To be honest, its not the spice that bothers me, but the lack of salt and seasoning.
Also, the amount of food you can eat out on your disposable income goes a longer way in SG, compared to the UK, which probably reflects the minimum wage. You are paying to be humane to the people who cook your food outside!
Hi again.
Delete1. Of course zones 1 to 5 in London is going to be relatively expensive lah, the same goes for Manchester, Birmingham, Liverpool, Glasgow etc city centre. But even in London, you get pockets of cheap areas like Hackney and Brixton which are deprived inner cities areas. Whether you would wanna live in a place like Brixton is another matter altogether.
2. I like living in the city centre too - I have a London W1 postcode.
3. Once you get out of London, prices fall like crazy. I once had a look at a Scottish estate agent's price list and realize that for my tiny W1 flat, I could get a mansion in rural Scotland with several acres of land. Maybe when I retire... but I might get v bored there!
4. If your agenda happens to be "get married & have kids", then great the HDB schemes will give you a helping hand. If not, then oh dear... I hope you have rich parents.
5. Subway is bland and boring - but it is what the locals like. Sure I prefer char kway teow, laksa, mee rebus, satay and fried hokkien mee - but that's v hard to find in the UK and the eating out market is controlled by market forces. You're gonna laugh at this: I had quite a good Chinese restaurant near where I live where they make dishes like my grandmother used to make, like Hainanese chicken rice but they would marinade the chicken in rice wine and I would be like, woah, that brings back memories siah - my grandma used to make that dish to give chicken rice that little twist. They would also use ingredients like tempeh (not tofu, tempeh) and again, I would be impressed as that's what I used to eat in Singapore. Then guess what? No business, Angmohs donno how to appreciate this kind of cooking - so it closed down and what sprang up in its place? Subway and it is doing so well, it's always packed. What can I say? Supply & demand, market forces. Ironically, that Chinese restaurant was very cheap too - but the locals just weren't interested in that kind of food.
6. You're right about minimum wage + the effect it has on the lower end of the food market. I remember the way I see older aunties and Ah Sohs work in the food courts of Singapore clearing trays and I felt so guilty. Like they are in their 70s and should be retired, yet they are working like that for v little money. And maybe I have just gotten used to the food here in the UK after having lived here for so long.
That's a real pity about the chinese restaurant that had to close down. Fortunately, in recent years people have become more accustomed to tastier food and small shops are springing out now. Its quite strange, since pork scratchings and salt and vinegar crisps are so salty (and so extremely delicious), but when it comes to a main meal, most food is usually lacking in salt.
ReplyDeleteI wouldn't be able to live in the countryside; I would be so bored as well.
I think some people do add salt to their food after it has been brought to the table, in most English restaurants and cafes, you have salt and pepper on the table. The chef doesn't add the salt, you decide how salty you want the food. I know I am medium in terms of how salty I want my food - some people I know like it saltier, others don't. But I think it takes more than salt to make food taste good - there's so much more to it and I think it is a great shame that British people are less adventurous when it comes to trying more exotic foods.
DeleteAs for the countryside, i think I may like it. I like the idea of having land, a garden, space to do things ... Like just sitting on a chair in the garden under a tree to read a book. I like the idea of that. Have a look at the photos: http://limpehft.blogspot.co.uk/2012/10/my-weekend-in-somerset.html But I think I prefer the countryside in somewhere like France or Spain, not the UK.