Budgeting

How Singaporeans Can Cope With Inflation

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Ryan Ong

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That’s easy: With a wheelbarrow. Then you get a rifle, so when the looters come you…what’s that? Oh, you want my alternate projection. The one where inflation’s just temporary, and Singapore won’t end up looking like that city in the Batman video game. Well in that case, let’s look at less extreme measures you can take. Forget your old school money-hoarding tactics, because the rules of the game have changed. As I also claimed at my last Poker game. Check out my stitches.

 

1. Invest or Die

The average savings account has an interest rate of 0.125%. That won’t cope with the inflation; the prices of…well, everything are rising faster than your savings.

Still, you can try to keep pace with inflation. It’d be like an obese chain-smoker trying to keep pace with a racehorse, but you can try. Divert some of your savings into investments, following the old 70 / 30 model. That is, 70% of your money is invested, and 30% is left in savings.

If you’re not into trading stocks or messing about on Forex, you can go for “safe” investments. Most banks, for example, offer fixed deposits with better than average interest rates. It won’t make you Donald Trump, but at least you won’t be perfecting a rice-and-soy-sauce diet.

 

Qantas 747
“Sure I’m investing…in a plane ticket out of here.”

 

2. Refinance Your Home Loan

Oh look, there’s light in this dark tunnel. I hope it’s not an oncoming train (you know our luck so far). Anyway, home loan rates are lower than usual. SIBOR has hovered at 0.4% for some time, and banks were very competitive from February to April. With any luck, they’ll keep price warring each another.

So dust off your accounts, and check what you’re paying. With the cost of living going up, even small savings of $100 – $200 a month can make a difference. And I suspect you’ll save more than that: Most banks offer low “teaser rates” for the first two years. If you’re on your third year, you’re probably swallowing a rate hike that borders on physical abuse.

Also, the clawback period expires after three years. So if you’re past it, don’t worry about having to pay back legal subsidies. Use loan comparison sites like SmartLoans.sg to find better deals. also, follow us on Facebook for more Home Loan news.

 

Bankers having a talk
“Damn, our new refinancing package just got banned…under slavery laws.”

 

3. Use Public Transport

Right now, even relying on taxis is cheaper than getting a car. And when the car quota drops to 0.5% in August, you’ll need to borrow the Hubble telescope just to check the COE price.

COE aside, there’s also the rising cost of fuel to contend with. Unless you’re lucky enough to have a company car, it’s difficult to justify the cost of private transport. Try the following measures:

  • If you need to send your children to school, check if there’s a parents’ car pool. Otherwise, explain to the school authorities that yes, your son can stop being late. Just as soon as they mail you $91,000 for your COE.
  • If you have family members who need medical supervision, see if your family doctor can set up a home visit scheme. If doctor’s appointments are going to be frequent, it might be cheaper to pay more per visit than to get a car.
  • If you’re single, consider crashing at a nearby friend’s place (or even in the office itself) the night before important meetings. It’s not elegant, but it can help you survive without a car.

 

BMW logo
“It stands for Break My Window. Now hurry up, this is the only way daddy can get you to school on time.”

 

4. Don’t Clear Out Your CPF

When you get to use your CPF to buy property, it’s tempting to wipe out as much of it as you can. Not our fault, because CPF money is like the afterlife (so elusive everyone wonder if it even matters).

But now’s not a good time for that. At 2.5% growth, you won’t find a bank with a better interest rate. Unless you have a few million dollars to invest, the CPF is probably your fastest growing fund right now. Even if it doesn’t outpace the cost of living right now, it’s better than nothing. 

So even if your HDB loan is approved, don’t empty your CPF by getting the maximum possible loan. And on that note,  don’t get the biggest apartment you can qualify for either. The best tool against inflation, on any level, is strict moderation.

 

Money Waving Cat
“Don’t need CPF lah. I have another way of growing my money.”

 

5. Do a Family Budget Review

Break out your hand phone bills, TV subscription fees, and club memberships. You don’t have to cut out any one of them, but see if you can diminish each monthly bill by just 10%.

For hand phones, for example, check how much of your data plan you use. If you don’t download much, maybe a 1 GB data plan is enough. As for TV, check how often you spend watching subscribed channels. If you have any that you watch less than twice a week, it’s probably not worth buying.

Likewise, keep a close eye on gym memberships or club cards. Maybe it’s time to take a momentary break from them. Cut them off for a few months, then come back when things are more affordable.

 

Kid looking at sugar cane juice
“No Tommy, that’s not a lot. Because that needs to last till next July. So sip slowly.”

 

Image Credits:
JUI-Media’s – Random Collections of Memories, ThinkGeoEnergy, sheriffmitchell,

How are you coping with inflation? Comment and let us know!

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.