No Singaporean can be accused of not thinking about money—or at least fantasising about what money can buy. Even something as simple as a walk in the park (petrol and parking at the Botanic Gardens, meal at restaurant, new athletic outfit) is a matter of dollars and cents.
And everyone knows you can never have enough money on our little shopping mall of an island.
So you should save and invest all your money to ensure you’re not living in a tent at East Coast Park when you get old and decrepit, right?
Well, not exactly—at least not if you’re guilty of the following habits.
1. Going nuts at sales
The fact that the Great Singapore Sale is a national event should tell you a lot about the psyche of the Singaporean shopper. To many people here, a sale is a great opportunity to save money. After all, if that $300 Gucci key ring is now on 50% discount, that means you’re actually saving $150, right? Right?
To state the obvious, if you were on the market for a 50 cent key ring from Popular Bookshop, you would actually lose $145.50 by buying the Gucci one.
The sad truth is that it takes a really disciplined shopper to actually profit at sales, someone who is very clear about what they need to buy and can objectively compare the price of a sale item with that of the item they originally set out to buy.
And most Singaporean shoppers, with their inability to stop the heart palpitations at sales, do not fall under that category.
Solution: If you’re the kind of person who lists shopping as one of your hobbies, it’s probably best to stay away from sales altogether. Just as people can voluntary ban themselves from the casinos here, there should be a way for serial shoppers to make sales off limits.
2. Hoarding savings
While saving money is definitely better than buying any number of Gucci key rings, if you fantasise about hoarding enough cash to do the Scrooge McDuck dive, you might be losing money to the ravages of time.
Decide how big of an emergency fund you want to have—many people opt to save 6 months of their monthly expenses—and then think about what to do with the rest of your money so it grows in value over time.
Singaporeans tend to sink most of their cash in property, mostly because nobody has any money left after buying a home. But if you don’t have plans to buy property anytime soon, consider other investment vehicles like stocks, bonds or unit trusts.
Solution: Decide on a fixed amount to keep as an emergency fund and invest the rest. Buying 4D or burying stacks of $100 notes under your bed do not count as investing.
3. Investing blindly
If you’re smart or deluded enough, you can justify anything as an investment. According to some of my friends, buying a brand new Merc is an investment (clients will be impressed!), as is a Louis Vuitton bag (the price will accrue when it becomes vintage).
If you’re scoffing at how ridiculous the above examples are, there are lots of more common instances of Singaporeans “investing” blindly in something without doing research, like the following:
- jumping into forex trading using forex bots
- paying for costly tuition classes for a child who doesn’t pay attention
- buying investment-linked insurance without doing research
- buying stocks based on tips from the kopi uncle
Solution: Review your investments objectively, seeking professional advice if necessary, and come up with a plan to shift the unsound investments to more sensible ones.
4. Sacrificing quality for cheapness
Singaporeans tend to spend tons of money not for quality, but for perceived prestige. That can only explain why you see these women on the MRT toting $5,000 designer handbags and then limping around in cheap shoes from JB that mangle their feet.
The smart choice would be to buy a pair of shoes that doesn’t bring to mind the ancient Chinese practice of foot-binding and downgrade to a bag that isn’t emblazoned with a monogram but still looks decent and carries out its function of containing stuff.
It takes a trained mind to identify which situations call for better quality purchases and how much quality justifies the price tag and is actually necessary.
Paying $25,000 for a Hermès handbag with a lifetime warranty is not the same as spending an extra $300 to get a computer that can handle applications created after 1995.
Solution: Before you spend money on anything, rigorously analyse the purchase to determine not only how much value you’re getting out of it, but also how much value you actually need.
5. Not having an emergency fund
When it comes to cash, Singaporeans just don’t have enough of it. That’s because most of their assets, if any, are tied up in property. And that’s why you end up with retirees living in million dollar bungalows and surviving on slices of Gardenia bread.
In your haste to invest all your money, don’t make the mistake of leaving yourself with too little cash, as a sudden emergency could result in your turning to credit or high interest loans.
Paying the 25% interest rate on credit card debt would wipe out the investment gains you would make from that sum many times over, unless your investment scheme is professional poker.
Solution: Instead of continuing to channel all your savings into investments, start setting aside a portion each month to consistently build a decent emergency fund.
Have you made any of the above mistakes? Let us know in the comments!