Friday, August 20, 2004
King Kong Debts Meets Middle-Class Life
I read with some interest from an article in the Christian Science Monitor about rising credit cards debts in the US and can't help but think how it mirrors exactly the same thing in Singapore.In the article,it was pointed out that the monthly credit card balance for the average American family has been increasing and how the savings rate has been declining despite the common wisdom that it is prudent to save.Another alarming figure that was brought up in the article is the number of bankruptcies that have been increasing in the States.I trust that if you are interested,you might want to check out the link for yourself.But anyway,like I said earlier,I can't help but feel that the same applies to Singapore as well as the US.
In Singapore,credit card debt is still increasing steadily despite the growth in overall credit growth since 2001.I am not too sure about the status of individual bankruptcies recently but it hit a all-time high of 507 in january this year.Meaning an average of about 16 people declared bankrupt on a daily basis.I am not too sure about savings rate in Singapore but what I gathered from certain overseas news sources was that the average savings rate in Singapore is still rather high...at about 55%!The average savings rate in US is about 13%.Now,I may be cynical but the average young person cannot,no way,save up to 55% of his salary.No chance.Of course,many factors play a part in savings rates.These may include interest rates,family/personal commitments,spending habits amongst others.I am not going to explore this further.
It was said that it was a cultural habit to spend in American culture,since the days of the babyboomers.It is also mentioned that it is now "almost countercultural to live within one's means" today,"especially for young people".How true of that too in Singapore.The young is getting so pampered with their handphones and sub-cards that they hardly know what it means to save up for a rainy day because their parents pay for everything.Saving seems about an alien concept to them,unless somehow,they have been through hard times or have been inculcated since young the importance of being financially prudent.It seems that the past East Asian trait to save up is no longer being passed down.I do not think the average young working adult is immune from this mentality either...not from what I observe around me...except those people getting married soon.Then they'd have a mortgage to pay and will be even more heavily in debt.
I do not excuse myself from this mentality.My savings account has been staying static for the past year or so despite my best attempts to breach a certain mark(I'm far from it).My guy friends around me all have the mentality of saving only so that they can splurge it all out again in overseas holiday trips.I am also guilty of this in some aspects but the thing is that I only choose to go either to places where I already have friends so that I can latch onto them for accommodation(altogether now,cheapo!!!)or to somewhere nearby where costs are cheap(the two are certainly not mutually exclusive).All in all,it mostly becomes a zero-sum game.You spend what you saved.So now when they have to pay for something besides their own(namely family concerns),they have found themselves needing to toil to meet this burden.My female friends?What savings?I have to admit it can be hard to resist the avalanche of adverts that the commercial world launches at female consumers.Be it clothes or shoes or cosmetics or whatever.Everything can be a girl's best friend.It's not as if guys are immune to it anyway.We have our addictions to allkinds of tech gadgets and CDs and stuff.It can also be a wonder why guys feel the constant need to buy replica jerseys of their favourite football teams when they change kits almost every season.
The last word I have to say is simply:Save.For old age,for emergencies,whatever.It'd be bitter at first but eventually the sweetness will follow.I think.And of course,don't hug your money into the grave with you.
