The 2013 Household Expenditure Survey is out and the statistics seem to be positive overall.
Both household incomes and household expenses have gone up over the past 10 years, with income increasing at a higher rate of 5+% compared to expenses which increased at a rate of 4+%.
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How About Loan Expenses?
Overall, that’s a good sign. Savings ratio seems to be pretty high as the income seems to be double that of the expenditure. It looks like Singaporeans are becoming more prudent. However, there are some issues with the household expenditure number. It does not include the housing loans, which is a huge chunk of most household expenditures. Other significant loan expenses which are not calculated include car loans and personal loans.
Breakdown of Expenses
At one glance, you can see that the majority of the expenses are made up of personal and household expenses at 43% and 30% of total expenses respectively. The essential expenses in this case already exceed 51% of the income, which is above our recommended 50/30/20 budgeting rule. And we have not even taken into account housing loan and car loan repayments yet!
If we add in housing loan repayments which can be anywhere from few hundreds to even thousands of dollars, the household expenses would be much higher. To have a more accurate picture of your household budget, you can make use of the Dr Wealth budgeting tool to help you figure out if you are budgeting effectively.
Significant Insurance Expenses
Looking further into the breakdown, the average monthly spent on insurance is $300. That comes up to $3,600 per year. Since insurance should be mainly to protect the breadwinner, we will assume bulk of it to be on the parents. At $1,500 per year, it should not be difficult to get adequate term insurance protection.
However, many people are still under insured, which means that they do not understand how to get term insurance for protection. Many people are still get whole life policies, as a result they are unable to get sufficient protection for their insurance. See Understanding Different Types of Life Insurance Policies