Savings are still "stuck".
Coming to Ho Chi Minh City to start a business about 4 years ago, Ms. Nguyen Thao Vy (27 years old), an interior designer, once hoped that gradually increasing income would help her soon have an accumulation to stabilize her life.
Currently, her income is about 18 million VND per month, an increase of nearly 4 million VND compared to three years ago. However, the amount of money actually saved each month is still only about 1-2 million VND, even in some months there is almost no savings left.
According to Ms. Vy, more than half of the income is spent on rent, food and travel. The rest must be divided among insurance, family support and arising expenses such as medical examination, car repair, weddings, company parties,...
At the age of 27, when the plans for getting married, buying a house and post-marital life are getting closer, the meager savings make her worried. She plans to get married and buy an apartment in installments before the age of 35, but with the current savings rate, the amount of money needed to pay for a house in advance is still a rather distant goal.
The reserve fund is the foundation of financial security
Talking to Lao Dong Newspaper about this issue, financial expert Nguyen Thuc Khoa - Founder and Chairman of ERIC Capital said that the most worrying consequence of income growth but low accumulation is not necessarily that a person becomes poorer, but that they gradually lose the right to choose in life.
When there is no reserve fund, workers may not dare to quit a job that is no longer suitable. The desire to start a business is also difficult to realize due to lack of capital. With a home purchase plan, if there is no large amount of money available, young people are forced to borrow more and face prolonged debt repayment pressure.
This gap is even greater if real estate prices increase faster than income, while the annual savings rate is low. Then, the issue is no longer "when can I buy a house" but "will I still have the ability to buy a house or not".
Limited accumulation also affects the decision to start a family and have children. This is not the only reason why young people get married late or are reluctant to have children, but when there is no stable housing, lack of reserve funds and income is just enough to cover expenses, taking on long-term financial obligations will become more difficult.
According to Mr. Khoa, the retirement problem also needs to be paid attention to early. The biggest advantage of young people is not the money they have but time. People who start accumulating regularly from the age of 25 can spend a smaller amount of money than those who start at the age of 40, but still achieve better results thanks to time and compound interest.
In the immediate future, young people should build a contingency fund equivalent to 3-6 months of living expenses, then prioritize handling high-interest debts, especially credit card debts. Next, form the habit of automatically dedicating a portion of income to savings, even if initially only about 1 million VND per month.
In addition to keeping a portion of the money earned, young people need to invest in professional competence to increase income in the long term.
Just saving is not enough if income does not increase. Two things that need to be done in parallel are to learn how to keep money and continuously improve earning ability," Mr. Khoa said.
