My cousin makes $1,200 a month but has no savings at 30

On a late afternoon a few weeks ago, my cousin, who is nearly 30 years old, and I sat down for a coffee to wrap up our 2023.

He confessed that he was laid off at the end of October and had been living with his meager savings.

Seeing his peers still employed and even planning to buy houses and cars, he feels very insecure.

Surprised by the news, I inquired about his lack of savings as he works in IT, a well-paying field.

He recounted that starting from his third year after graduation, there were times when he earned VND30 million (US$1,220) a month for a total of VND360 million a year, yet he failed to save money.

My cousin’s story prompted me to write this opinion.

I just want to offer a new perspective on the relationship between income and spending. I will not discuss incidents like gambling losses or losing money in cryptocurrency.

In my view, many young people, despite having a high monthly income, struggle to save because they focus solely on their income.

For example, my cousin, earning VND30 million monthly, felt justified in renting an apartment for VND10 million a month, a third of his income.

He also felt like he had the right to treat himself to dinner at fancy places with friends and travel several times a year.

Because he earned VND30 million, he believed he could afford to buy a new phone every year along with lots of expensive gadgets that ended up abandoned after being used a few times and then sold at significantly lower prices.

Spending proportionally to income is a common error. Human desires are limitless, but income is not and does not always rise accordingly.

Meanwhile, if usable monthly income is calculated by subtracting how much one can save, then their finances will always be stable.

This way, even with a VND10 million salary, one can still save a considerable amount each year.

For example, with said salary, I would save VND4 million first then limit all other expenses to the remaining VND6 million.

My cousin now lives in a small rented room with a modest lifestyle just like in his student days.

If one keeps spending all their income on impulsive purchases, when an emergency arises and the cash inflow is no longer available, they will end up reverting to a frugal lifestyle as they have little money saved up for such situations.

So what is your viewpoint on this matter?

Reader Thai Hung

* This opinion from a reader was translated into English by AI. Opinions shared by readers are personal and do not necessarily match VnExpress’ viewpoints.