Salary increases by 5 million VND, spending also increases almost correspondingly
Working as an office worker in Ho Chi Minh City with a salary of 15 million VND/month, at the beginning of this year, Mr. Hoang Quoc Bao (26 years old) received an additional freelance marketing job, taking advantage of working in the evening to increase his income. Adding this freelance job, Mr. Bao's monthly income is about 19 - 21 million VND.
When his income increased, he planned to save at least 4 million VND/month. However, after more than half a year, his savings still only fluctuated around 1–2 million VND/month.
When his income was higher, Mr. Bao moved from a rented room priced at 4.5 million VND to an apartment with a rent of nearly 7 million VND, and spent more on food, shopping and entertainment services. "I don't see myself spending too much, it's just that the expenses I had considered before are now normal. Looking back at the end of the month, the additional salary increase is almost gone," Mr. Bao shared.
Talking to Lao Dong Newspaper about this issue, financial expert Nguyen Thuc Khoa - Founder and Chairman of ERIC Capital said that the phenomenon of income increases but accumulated money does not increase needs to be viewed in groups, instead of being completely attributed to lack of spending discipline.
For people with incomes below about 15 million VND/month in Hanoi or Ho Chi Minh City, the main reason may come from the pressure of living expenses. Rent, food and travel have accounted for the majority of income, making the savings space very limited.
Experts analyze that when rent increases by more than 6%, external food costs increase by nearly 7%, while wages only increase by about 8%, the increased income is almost absorbed by living costs. In this case, advice such as limiting coffee, milk tea or cutting a few small expenses does not solve the essence of the problem.
Young people in this income group need to prioritize controlling large expenses such as housing, food and travel, and consider solutions to increase income instead of just focusing on cutting small needs in life.
Do not let the entire increased salary become new spending
When income reaches about 20 million VND/month or more, the trend of raising living standards is often more apparent. Young people can switch from a rented room of 5 million VND to an apartment of 8 million VND, change to a new car or choose meals and services with higher prices.
According to experts, people adapt very quickly to new living standards. The feeling of excitement when upgrading houses, vehicles or consumption habits usually only lasts for a period of time, but new expenses become fixed obligations every month.
This does not mean that young people have to give up improving the quality of life. When income increases, each person can completely use a part of their labor product to live more comfortably. However, it is necessary to avoid letting the entire increased income turn into new expenses.
A solution proposed by experts is to divide the additional income in half, half for improving the quality of life and the other half into a savings account. This method helps each person both feel the results of increasing income and ensure increased assets over time.
In addition, young people can apply the principle of "paying me first". As soon as they receive their salary, the savings need to be transferred to a separate account, and then the rest is used for living expenses. If waiting until the end of the month to save the remaining amount, it is highly likely that the accumulation will be very little or no longer available.
To accurately identify your financial problems, experts recommend recording all expenses for at least three months. Tracking helps identify rapidly increasing expenses, distinguish between essential expenses and living expenses and adjustments before they become long-term habits.
