From: The Business Times
IN JUNE, a new app from the Central Provident Fund (CPF) called the CPF Starter was uploaded onto the iTunes app store.
I can’t remember how I noticed it, but I downloaded it.
What intrigued me was how the app tried to crowdsource financial data among Singaporeans.
For example, you can enter your age range, salary, and how much you save a month. The app then tells you what proportion of your cohort saves more or less than you.
You can thus benchmark yourself against other people your age who have also downloaded the app and put in their numbers.
I fiddled around a little to figure out what my peers were saving.
In mid-August, the typical person aged under 35 who had downloaded the app and entered his data was saving S$800 a month. Half save more and half save less than that amount.
The bottom quarter saves S$250 and below, while the top quarter notches S$1,500 and above.
These numbers are rather encouraging.
Assuming the typical Singaporean wage of S$4,000 a month, this translates to a median savings rate of 20 per cent.
This savings rate is already far superior to that of Americans, who are saving only 6 per cent of their income, according to recent data.
If you can save 20 per cent of your income a month, and CPF helps you save another 37 per cent, you will effectively save more than half of your income every month.
This will go a long way towards paying for the rather expensive housing we live in compared to the rest of the world, as well as ensuring one can retire comfortably.
I asked CPF about the app, and they told me it had seen, by Aug 6, more than 15,000 downloads across both iOS and Android devices. About half are users aged 35 and below.
“The data collected is updated every time a new user enters his or her savings information or when an existing user updates his or her savings information,” a CPF Board spokeswoman said.
How much are the young saving? The figure seems reasonable. Yet it is also possible that it is biased upwards if those who have downloaded the app tend to be more financially savvy than the general population.
I did an anonymous online survey of 10 friends and colleagues. The most common sum saved was S$1,000 a month. Quite a number managed more.
Saving S$1,000 a month will compound into S$100,000 within seven years, assuming the entire sum is invested at 5 per cent a year.