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What Do Millennials Do With Their First Paycheck?

Molly Joshi

Money management is particularly a foreign concept to millennials, with many of them spending their first salary without a second thought. They look at it like new farmland of excitement coupled with some endless spending opportunities. Unfortunately, this only marks the start of a new independent, yet unplanned future where the whole money earned is the whole money spent.

It is the same reason that the majority of the youths are in huge debts. While it’s by no means a depiction of the entire generation, most young people are utterly clueless about financial management and others are exceptional investors. For instance, a report by HSBC’s on The Value Of Home Global Survey in Beyond the Bricks 2, showed that millennials are the quickest to save essentially for housing with more than half of them owning properties. Others just don’t care about saving for retirement after all retirement is the last thing in their minds. However, what a Singaporean millennial does with his or her first paycheck substantially determines the person they will become in the future.

With intentions of finding out how millennials spend their first salary, the Business Times conducted a survey asking the Singapore millennials how they spent their beginner paycheck. The findings were pretty apparent in exposing some truths about Singapore millennials. Here are some of the things noted about them in the survey;


They spend too much on going out

Singapore is an expensive city-state, and going out may not be very economical for many outgoing millennials. With going out comes eating, drinking, and transport which can virtually be quite pricey. Singaporeans may not notice it since many are used to the growing economic condition.

Millennials were questioned about their expenses during their first month, and most of them showed a commonality in their spending habits as they mentioned transport, food, and entertainment. In most cases eating in restaurants is their only option. While some restaurateurs keep blaming the rising cost of labor and cooking ingredients, a famous 2013 newspaper report revealed that the prices of food had inappropriately gone high which normalized the high rates of eating in hotels.

Additionally, young people no longer hang out in parks or other outdoor facilities that are more economical, so drinking, eating and other related indoor activities which can be generally costly tend to be the norm. Therefore, it’s not surprising to see a youth pack their backs for a two-day weekend vacation upon receiving their first paycheck.


Family background plays a significant role

There is already a famous talk about how rich youths from various wealthy families start their working life with a big bonus in life. In Singapore, the consumption tax is quite high while the income tax is low which gives the wealthier family a stronger ground. The poor get poorer while the rich continue getting richer because the lower your income, the bigger the probability of you spending all your starting salary as most of it drains in the consumption tax.

Another crucial point to note is that there is no estate duty and that people aren’t taxed on investments, meaning that if a young person inherits tons of wealth from their parents, they do not get taxed on these investments.

Wealthy Singaporean parents also spoil their kids financially, and if not professionally advised, these young people may overspend and probably become careless extravagants in the future. One of the applicants, for instance, was gifted with an Audi car which he couldn’t get to the road since he didn’t have his license out yet.

The survey also reported that many students from less wealthy families, to be more responsible as they are expected to support their parents financially. This indicates that millennials from not-well-to-do families saved up more, stayed home and spent less of their first income compared to those who came from wealthy families.


Millennials care very little about the expenditure

Quite universal but very absolute, millennials hardly track their spending. In the study, most of them had no idea how much they spent on their first month. Many of them admitted not to have ever tried to monitor their expenses or make a budget while others spent their first salary within two weeks and had to start struggling the rest of the month —the reason for constant debts.

This doesn’t come as a surprise to many. No matter how broke you go as a millennial, the chances are that you aren’t close to thinking about saving or investing for retirement probably because you assume you’re still too young an employee to start saving. Some believe that the money you earn each month is just some reimbursement for you to spend from day to day.

Poor budgeting, as well as salary management, can cost any individual a hurtful future. The chances of having a future generation that does very little or no saving at all are very likely. This kind of attitude, if carried on in future, can be one huge step stone to financial disaster.  Various surveys have been taken recently claiming that 36% and 80% of Singapore millennials between the age of 20-35 have no savings.

One particular survey conducted by stated that a large number of the youths between the above age bracket would most likely lose their houses within three months in the event that they became unemployed because they have no savings to sustain them for long. “This is endemic of what’s rapidly becoming known as the ‘renting generation’ who would rather not save money for a mortgage, pension or even for emergencies.” Stated Mark Hall from Such numbers indicate a call of action and rising need for a sound financial awareness.


Financial discipline is essential

Avoiding the good stuff as a millennial in Singapore may seem daunting especially if it is your first paycheck. In most cases, you feel like doing something memorable—which in this case could cost you more than you budgeted. However, the sooner you develop great saving and budgeting habits, the more comfortable and more natural your life becomes. Instead of spending that money going to non-salubrious vacations, try having that money saved on constructive future projects like investments and insurance. This can go a long way towards helping you make good use of your starter salary.

You may also like to read:

The 7 Money Facts all Singaporeans Should Know by the Time They Turn 18

Powerful Quotes on Failures from Jobs, Gates, and Edison



(By Molly Joshi)

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