Robert Kiyosaki quote

It’s true. A junior staff who earns $2,000 a month can potentially be wealthier than a banker who earns $4,000 a month if the junior staff saves 50 percent or $1,000 while the banker saves just 20 percent or $800.

Sure, the junior staff might not be living as luxuriously as the banker right now. But the junior staff might have a much more comfortable retirement than the banker, not to mention earlier, too.

Of course, you most probably know all this already – spend less than you earn and save more than you spend. All these are age-old advice but so many people still end up laden with credit debt and housing loans. People slog and slog to pay off their debts over the course of their lives only to be confronted with old age and retirement needs.

Pretty cars and big houses are not worth it

According to Ministry of Manpower, the median income for Singaporeans and Permanent Residents (PRs) is $4,056. A median income household where both husband and wife – Mr and Mrs Tan – work would add up to $8,112 per month. Should the Tans buy a pretty car and a big house since their annual income is close to a six-figure sum ($97,344 before taxes and CPF deduction)?

If there are any money lessons I’ve learned from my parents and the older generation, paying off housing loans as quickly as possible using partial capital repayment and buying practical cars are probably the most valuable of them all.

Driving a pretty and expensive car and living in a huge house but having to slog for 20 to 25 years of one’s working life aren’t worth it. Sure, the glamour of living a high life might look good but it certainly doesn’t feel good because of the debt.

Opting for an HDB flat instead of a condominium or terrace house would prove to be much more practical for most Singaporeans around the median income bracket.

A fairly well-to-do family living in an HDB flat can lead a more comfortable and stress-free than a wealthy family living in a terrace house with several luxurious cars. Ultimately, living on credit will eat away at one’s sanity and life.

Nathan W. Morris quote

Related: How Much Savings Is Enough Savings?

Simple lifestyles can be sufficient and comfortable

No one can deny the fact that living a luxurious life is indeed enviable. But the stress that comes it because of the bills is often not acknowledged. This is especially true for an average person earning a median income.

A simple life, on the other hand, gives us a peace of mind and time to spend with our loved ones. Occasional trips to restaurants and annual family overseas vacations are still possible, as long as we save more than we spend.

Leading a simple lifestyle would also mean it takes a lot less to retire. Chances are we won’t need to downgrade our lifestyle, too. Local financial blogger AK advocates for a simple lifestyle. He’s wealthy, undoubtedly, but he lives modestly and therefore, a lot more time for himself and his blogging hobby.

Luxurious lifestyles – fine dine, pretty cars and big houses – can be maintained while you’re working and earning an income. But for median income Singaporeans, this kind of lifestyle leaves little for our piggy banks, our very retirement nest egg that will see us through our later years. A debt-free life is a stress-free life.

Related: Our Savings Depend On Our Lifestyle Choices

More savings mean more opportunities to grow

Warren Buffett Quote

Turns out sleeping well at night is not enough. We have to look for ways to allow our money to grow while we’re not working too. Our savings from living within or below our means can grow if we put the money to work.

There are multiple ways to make our money work for us and investing long-term in a low-cost index tracker is just one of the many ways.

Or waiting for the right opportunity to come by and because the cash pile we prepared, we’re able to seize that opportunity. The last financial crisis almost a decade ago wiped out many people’s assets but it also made the patient and prepared rich.

Related: Why Saving Alone Is Not Enough; Grow Your Income