Owning a house or a car on one income can be intimidating, especially in Singapore, where the price of housing and the cost of owning a car seems to be stratospheric. Fortunately, it needn’t be so it is possible. With the proper mindset, thoughtful planning, a reputable licensed money lender, and a little patience, you can achieve these big goals without saddling yourself.
Take a Hard Look at Your Finances
You start from basics: where is the money going? Make an income list and all your expenses, from rent and utilities to insurance, to groceries, to any loans. Take all those essentials out of your income — what will you have left? That’s your starting point for how much you can afford.
You also need to consider if you’ll have enough for other expenses after the home or car loan. This is why there are rules such as MSR, or Mortgage Servicing Ratio, and TDSR, or Total Debt Servicing Ratio, which are meant to prevent excessive borrowing. For example, with the housing loan, only up to 30 percent of the income can be charged. If 30% of your salary isn’t enough to afford mortgage or the remainder isn’t enough for your everyday expenses, you’re not yet ready for it.
Also ask yourself this: can you sustain this without compromising on your comforts or savings? If the math doesn’t work out, that’s cool — you can always make some adjustments in your plans or timeline. It’s better to proceed at your own pace rather than to subject yourself to undue stress.
Choose: House or Vehicle?
Under one income, it makes sense to have only one mammoth goal at a time. Housing would probably be the big deal, as it’s the roof over one’s head, and it’s an appreciating asset. Cars have really steep costs that multiply with time.
If you plan to prioritize a house, grants such as the Enhanced CPF Housing Grant could make a whole difference. But if it’s a car, then a used car or more fuel-efficient models would cost less.
Build a Strong Savings Habit
The secret to making big goals achievable is saving consistently, even in small amounts. Treat savings like any other bill — non-negotiable.
If you are buying a house, save some of your money in the OA CPF for a higher down payment. With a car, save enough to cover the down payment and the additional expenses with insurance COE, and maintenance, too.
Savings is boring but it works. The closer you feel that you’re making progress, the closer that every dollar you save is toward your goal
Source Additional Income
If you feel strapped for extra income at the moment, supplement the current ones with side streams of income. Freelance work, a part-time gig, or some monetized hobby can be that slight push. Money can be made by becoming a tutor, creating designs for clients, or selling your arts and craft-based items.
Just remember not to overextend yourself with that added workload that starts to consume some of your well-being. That’s a boost, not a burnout.
Borrow Wisely
Borrowing is often necessary to meet your goals. When you do, be wise about it. For home loans, shop for competitive interest rates and compare fixed versus floating-rate packages. Fixed can lock in interest rates so that there are no surprises, as interest rates have their ups and downs. Variable may save money when interest rates are low.
On the other hand, with car loans, you want to think in terms of total cost in interest, not just your monthly payment. You might end up paying less on the loan and repayment by paying a premium to get it rolled into the down payment.
Only borrow what you need and can repay to ensure room in the budget to absorb those unexpected expenses so you don’t find yourself walking a financial tightrope.
Prepare for the Unexpected
Life has a way of throwing curveballs, and without a safety net, those surprises can derail your plans. This is why having an emergency fund is crucial. Aim for at least six months’ worth of expenses tucked away, so you’re prepared for anything from medical emergencies to sudden job changes.
This buffer will calm your mind, knowing you will not have to choose between repaying your loan and money for an unforeseen cost.
Leverage Available Resources
Singapore provides its new-home buyers several incentives, such as housing grants and programs, which lighten your financial burden. For a car, selecting eco-friendly cars can help you save some cash in the form of rebates under the Vehicular Emissions Scheme (VES).
Never be afraid to ask for advice or help. Questioning a financial advisor or a real estate agent will enable you to discover things that you would not have found out otherwise.
Living Below Your Means
As income grows, so does the temptation to spend more and to enjoy more of life’s luxuries. But it’s staying frugal and avoiding unnecessary expenses that gets you to the big goals quicker. Don’t think of it as deprivation. Instead, you should view it as focusing on what really matters to you.
This is also true when it comes to choosing a home or deciding whether to buy a car or not. Rather than a big, glamorous house, potential homeowners can go for a modest house that is spacious enough for you and your family. As for a car, you should only get one if there will be many instances when public transportation won’t cut it.
Monitor Your Progress
Achieving big goals requires time, and staying on track requires regular check-ins. Review your efforts to save and earn money for either a home or a car. If something isn’t working, don’t be afraid to adjust your plan.
Aside from it being the prudent thing to do, it also feels inspiring. Knowing how much you can make it in can keep you focused, even when the journey gets as long as it is.
Conclusion
It’s not a piece of cake to get that home or car on a single income, but it is possible. With careful planning, realistic thinking, patience disciplined saving, and smart borrowing, you will make it without being overloaded. Also, don’t compare your journey to that of someone else. Keep focused of your plan, your priorities clear, and know that every little bit counts towards your milestone.
