Slaying Inflation: How a young couple is sticking to a disciplined plan to save for dream home

SINGAPORE — Mr Karl Teo and Ms Doris Tan have been dating for the last three years, and plan to tie the knot and start a family soon. 

And of course, they plan to buy their first home.

The couple, both financial advisors, started saving up for their dream home in May 2022, but they have had to redraw their financial plans as inflation kept rising throughout the year.

“When last year’s inflation started to kick in, that’s when we knew that our projections had to be adjusted a bit,” said Mr Teo. 

It does not help that home prices have also been rising in tandem — houses that they are eyeing, which used to be priced between S$550,000 and S$600,000, are now being marketed at S$600,000 to S$700,000.

Furthermore, renovation costs have risen, and the downpayment required for an HDB loan was raised from 15 per cent to 20 per cent in September last year. 

“It affected our planning, but you have to stay adaptable,” Mr Teo said, adding that he and Ms Tan will consider setting a smaller budget for their wedding.

The couple is looking at getting a four- or five-room resale Housing and Development Board (HDB) flat and they are willing to spend about S$700,000.

They are not considering applying for a Build-to-Order flat, because these will take four years or more to be completed.

“We’re already 28. If (we had to wait up to five years before getting our home), we’d be 33 and I would prefer having a baby sooner,” said Ms Tan.

TODAY sat down with the couple for a chat about their three-year plan to save up for their dream home.

TELL US MORE ABOUT YOUR DREAM HOME

Mr Teo: A condominium of the same size as a four- or five-room HDB flat would have a very big mark-up that we’d have to set aside in our budget. That’s why we are considering, more likely, a four- or five-room HDB flat, because the priorities for us are size and to accommodate for future family planning.

We also want our house to be a home first, and we don’t see it straight off the bat as an investment. We are looking at size and location – definitely close to our parents’ homes, which is somewhere near Yio Chu Kang or Sengkang. So we are looking at areas like Canberra, Sengkang… where the estates are newer and the residents are likely around our age, and where we will possibly have a community.

Ms Tan: So far, based on the market prices that we see, the budget we should set aside is about S$700,000. For example, Canberra, when we look at the listings – it’s in the range of S$600,000 to S$900,000, so S$700,000 is a good gauge.

HOW ARE YOU SETTING ASIDE THE MONEY?

Ms Tan: I think breaking down (our goal amount) into small numbers is very important. For example, if we are looking at a S$700,000 house, the first down payment will be 20 per cent, which is about S$140,000. Then we add in renovation costs as well, maybe around S$60,000 to S$70,000, and then from there we work backwards.

So we have to save about S$200,000 in total, over three years. If we divide that by 12 months – that is the amount that we have to save every single month from now till then. 

So roughly it’s about S$2,500 that we have to set aside each month, individually. If we find a home that’s cheaper, we’ll have more money but we wouldn’t be looking at something that’s over the budget.

Mr Teo: The good thing about resale flats is that you get to choose when you are ready, essentially, because once you buy a house, in three to six months, you can move in already. 

For us, we’ve been working since university… so we had savings before graduating, and that gives us a lot of lead time in terms of our savings accumulation. We did not have to worry about clearing off our university fees right after graduation, for example.

WHAT SACRIFICES HAVE YOU HAD TO MAKE?

Ms Tan: I like to buy clothes and there were a few months when I overspent and realised that all this spending was going towards my wants, not needs.

There were parcels of clothing at my house that I had not worn, and yet I still continued buying. So I became more aware of my purchases. I won’t say it’s a sacrifice… I’m still happy with what I have, just (cutting back on) unnecessary spending.

Mr Teo: After graduating, I wanted to travel a lot more. But we realised that multiple small trips can add up. So we decided to plan one good trip a year and make it memorable, while ensuring it’s well within the budget.

Ms Tan: Like last year, we went to Australia, so that was quite nice.

Both of us have four bank accounts each – a savings account, a goal account for the S$2,500 monthly savings, an account for expenses and a daily insurance and investment account.

I realised that setting aside my monthly goal amount and manually transferring it from my savings account to another account was very hard initially. So I set up standing instructions, so part of my salary from my savings account gets automatically transferred to my goal account every month on a specific day. 

This helps manage the emotions too, because sometimes when you see the money there, you won’t feel like transferring it. You might think ‘Eh, maybe I can spend more’. This systematic way of transferring every month has helped a lot for me personally.

I also track my budget, and that helps a lot. Before I started tracking, if I wanted to spend money, I’d just spend it and save what’s left. But now, if I set my food budget at S$500 per month, I make sure that I stick to that and if I spend more in one month, I’ll make sure to spend less the next month.

Of course, there are months you will overspend. So I try to be flexible, but still in control. Initially it was hard, but as I got into the habit, it became quite okay.

HOW WILL YOU SPEND AND SAVE AFTER YOU BUY THE HOUSE?

Ms Tan: We’re looking at areas such as Canberra, and these houses just finished their Minimum Occupation Period, so they are pretty new still – very modern, quite nice, well-furnished already. 

We have the option to choose what kind of house, what kind of style we want. If we find a house that is just nice – the layout, the fittings, everything is ok – then we won’t have to spend so much on renovation. So that’s something we’ll look out for as well. 

Mr Teo: But we believe in buying good furniture that will last us for a longer time, so that’s something that we are willing to spend on. We want furniture that can last and move with us into future homes.

There are actually good places where you can find very nice household fittings and household stuff. For example, I went to Thailand with my family a while back, and we went to Chatuchak Market. 

There are a lot of nice, high-quality products produced in Thailand, and they offer international shipping. After visiting and seeing the quality of the goods and services and the prices they are offering, we thought, why not take a short trip to Thailand and see what we can ship or buy back from Chatuchak? 

My family bought a lot of household wares and silverware – vases, and lamps and things like that – that we still use, and are of very high quality.

WHAT HAVE YOU LEARNT FROM THIS SAVINGS JOURNEY?

Ms Tan: I think the most important lesson is that you must have a conversation with your partner. Some friends of mine are not very open to talking about money with their partners, but I think that if you are building or intending to build a future together, having open conversations about finances and spending habits are very important.

Mr Teo: You also need mutual understanding. If it’s a common goal, there might be sacrifices that you have to make together as a couple.

I also think it’s important to not inflate your lifestyles too quickly. For example, maybe we could afford a condominium that meets our size preference, if we choose to stretch our budget a little. But it would mean taking on liabilities that are way higher than an HDB flat.

There's only so much expense you can cut also. I think we can also focus on trying to acquire skill sets that are in demand in society – to increase your income, in short.