The other day, a friend told me he didn’t know how he could cut down on his spending. He earns $6,000 a month, lives with his parents and doesn’t have a car, but spends over $4,000 a month. He showed me his budgeting app, and the first thing that stood out was the fact that he spends $2,000 a month on food and dining out. He also has separate categories for alcohol and gambling, but let’s not go there.
If you don’t have a budgeting app that lets you track your spending in various categories installed on your smartphone, you need to get one now. Chances are one or two categories will stand out. Here are some of the more common categories you might be overspending on, and how to rectify the problem.
1. Eating out
Based on the fact that 70% of the time when you meet friends you’re either sharing a meal, downing drinks or having coffee, eating out tends to be a huge expense many Singaporeans face when it comes to discretionary spending. If you eat out with your colleagues at lunch every day, this category can add up to hundreds of dollars.
Obviously nobody is going to tell you to eat less. Your problem most likely isn’t the frequency of your meals, anyway. Your biggest problem is that you eat too often at places that are out of your budget. If you must eat out twice a day every single day and your budget is $200, that means you can only afford to spend an average of $3.30 a meal. If you eat out only twice a week on the same dining-out budget, you can afford to spend $25 a meal.
Solution: Nobody likes to admit their friends are going somewhere that’s out of their budget. You have two options: to lower the frequency of your meals out so you can allocate a larger budget to each meal, or to eat at places without your budget. For most people, a combination of the two works best—for instance, you might choose to bring lunch to the office twice a week and at the same time reduce your nightly restaurant meals to twice a week. That way you won’t have to completely forgo dining out at nice places.
Hardly anyone complains about having overshot theit transport budget if they’ve been relying on buses and the MRT. If you’ve been spending too much in this area, that can only mean one of two things: You’ve been taking lots of taxis, or your vehicle is costing you a bomb.
Solution: If your problem is that you always end up cabbing, try this trick. Whenever you go out, set an alarm on your phone that alerts you when you have to leave to catch the last bus. If you’re staying out late, make that the last night rider bus, or the last guy who can give you a lift back. If you find yourself staying late at the office and then taking a cab home because you’re too exhausted for public transport, set an alarm to remind yourself when to leave. Print documents to review on the MRT if you really can’t finish your work. That’s better than leaving late and then mindlessly watching some awful drama serial on your smartphone.
If it’s petrol/ERP/parking that’s killing you, well, I’m not going to tell you to give up your car because I know how damned hard it is to go back to the inefficiencies of public transport. What I do is maintain a list of the cheapest parking areas in most of the areas I frequent, as well as know when the ERP gantries are at their most expensive. I used to come in half an hour late to work, which not only let me cut my commuting time in half but also saved me 50% to 70% in ERP fees. Making sure you’re saving money on petrol with the right petrol credit card is also something you can’t afford to ignore.
3. Entertainment and Hobbies
Singaporeans always face this dilemma. Should you spend a bomb and go get that boating licence/become an MMA champion/pimp your ride for the car club meeting, or should you just become one of those listless people whose only hobbies are “eating and sleeping lor”?
Solution: No, you don’t have to become boring. But you might have to give up more expensive hobbies in favour of cheaper ones. Make a list of all the things you’re interested in, and then group them according to cost. Chances are you actually have enough low cost interests to take up 100% of your free time, meaning that giving up your more expensive hobbies can be made less painful.
Some hobbies can be made cheaper by sourcing for second hand equipment on eBay or Gumtree, searching for free events on meetup.com or simply not always going for the most expensive teachers or training facilities. Take a problem-solving approach to cutting the costs involved in pursuing your interests.
Which areas do you always spend too much in? Tell us in the comments!
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