And you'll see why this affects you...
I'll loosely classify people's networth in groups.
So a homeless person/poor has no place to stay, maybe living in subsidized rental flats.
They don't earn much per month, maybe $800-$1,200 household income, they have trouble making ends meet.
They don't have much AUM.
And I'd classify a low income person or family is staying in a 2-3 room HDB.
They earn around $2,000-$4,000 per month household income. They are comfortable but don't have much to save, or don't bother saving every month due to simple pleasures. At this income level, it's easy to spend on simple pleasures like cigarettes and not have much left to save.
A middle income person/family is classified as staying in a 4-5 room HDB.
Earning around $4,000-$8,000 household income per month. They are comfortable, they can save if they want to, or if they don't save, they will buy a car, they definitely aren't having much trouble in their finances if they don't do stupid things.
A middle high income family stays in an Condo or something like that.
Earns around $8,000-$15,000 household income per month. They are the folks who go to Europe for shopping holidays, buy their big cars, etc... no worries about money, but they tend to get into big mortgage debt.
The low level rich is stays in a semi-D.
Household income ranges $15,000 and above...
Then there are the rich who stay elsewhere...
OK... now these are very very loose classifications.
Cos rich or poor, high income or low income, a lot depends on spending habits, saving habits, medical issues, etc...
But generally for this article I need to classify different groups of people else it's hard to continue describing. So just take the classifications as general networth or lifestyle abilities of the different groups of people...
You see... when I first started working, I was probably considered low income. IF I didn't have the support of my family and stay with my parents, it would be hard to switch to middle income. Cos a lot of my money would be spent on rent. I think a lot of us had this benefit of having somewhere to stay to shore up our reserves before we moved out...
So if we look at a homeless person having a low earning power, for him to move to the next level, which is low income level, is not going to be easy. He already has to support himself or his family with a low income, even if he stays in a subsidized rental flat. Furthermore, if his income gets too high, he will have to move out and not be eligible for subsidized rental. This would mean moving to a more expensive REAL rental place, which would cost him around $700 per room.
Not to mention he would have to scrimp and save from his already very meager salary to save up a few more dollars to move into the next category and in the end he will have to use all this money to pay HDB for a small 2 room flat.
You see, it's not easy to move from one level to another level. It's possible. Definitely. But it's not a walk in the park. And it's a long journey which will take years. And it takes a lot of dedication a years to move from homeless/poor to low income... And yet, at this point, life isn't really good yet. Cos... low income isn't much better right? He'd probably need to be in middle income to be comfortable. This would mean that it's probably a 30 year journey. And how many people have a 30 year plan and can stick to it? Not to mention if they are struggling day to day, do they have time to think of a 30 year plan and execute it? Do they have the knowledge to chart out such a plan? Do they have the discipline and willingness to sacrifice all their simple pleasures to achieve it? It's not going to be an easy journey. It's going to be long and hard and filled with sacrifices. 30 years is a long time.
If we look at all the other levels...
Low income to middle income... Most people don't upgrade when they are young. They take many years of savings and working before they move to the next level IF they ever move at all. Furthermore, most people don't use savings to fund their upgrades, they just use their CPF monies. Which means, they didn't really diligently save to move to the next category. They just worked as per normal living their own lives, and didn't particularly save, and just used their forced savings. Those who level up to the next category early in their lives are the ones who saved diligently and strove hard to level up.
For a typical family who lives in a 4/5 room HDB. When do they usually level up to their condos? Most people will do so later in their lives, usually around 40-50 years old. This is around a 20-30 year journey. IF they ever manage to level up to the next category.
Is it possible to achieve this earlier? Yes, I know people who do, but they worked really really hard and saved up really really diligently. Most people have other expenses, spend more as they earn more, upgrade the other parts of their lives, they have children expenses, etc...
Now, there's nothing wrong with this... it's just part of life.
And the next range, when we look at middle high income to low level rich... it's the same. The mortgage on a semi-D is around double that of a condo... the family would need to double their earning power before they are able to afford to move to this next level. So same thing... it's a long journey.
Now, I think we all can see that all these level ups take time. It's not a one year plan. It doesn't work that way. It takes a lot of personal discipline to achieve the upgrades earlier. 10 years instead of 20 years is still a very long time. How many people are able to be disciplined and save diligently for 10 years straight?
Not so easy.
Furthermore, it's easy to get comfortable. Look at me. I stopped working early. Means I'm pretty stuck at my current level. Cos for some people, it's not worth the effort and sacrifice to keep leveling up to the next level.
And once again, that's fine.
So what am I getting at?
It's easy for us to look at a poor/low income and think, why doesn't he try to improve his life.
Maybe he is trying. But we don't get updates of his life most of the time. Maybe he succeeds in 10 years time, but we would never know, cos we don't follow up on it. We just comment and move on.
But all these things take time.
For us to look at a low income and say, why doesn't he make changes to upgrade his life...
Is about the same as I look at someone staying in a 4 room HDB and saying, why doesn't he upgrade and stay in a condo...
Cos... IT TAKES TIME!!!
Even if the person works hard and saves diligently, it still takes time, and a lot of it. It's not an overnight thing. And it's also easy for the person to lose discipline and just settle in their own category, cos the journey is so long and so hard and it takes so much self control...
And how does this affect you?
Well... we are all the same right?
We can settle in our own categories... that's fine, cos we are comfortable and since the journey to upgrade is so long, we really can't be bothered and we are happy where we are... That's fine...
Or even if we want to work hard and level up to the next category... it also takes time. 10 years for an early upgrade, else it's probably around 30 years for a normal upgrade.
So all these take time, and effort, and discipline, and luck, and planning, and a lot of dedication...
I think it's fine for anyone to stay and be happy in their own category without upgrading. That's fine if they want to live their lives that way.
The thing is... to upgrade, takes time, no matter how much hard work you put in, it still takes a lot of time.
Of course if you don't put in any effort, then even with all the time, it also won't happen.
So if you really want to upgrade, then you gotta be disciplined and save hard and work hard and be prepared for a long journey.
It's about the same as a poor man trying to get to the next level. It's going to be a long journey for him as much as it is for someone from the upper ranks.
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