With credit cards and contactless payment methods readily available, it is easy to fall into the temptation of buying everything that comes to mind. Many of us may find ourselves spending out of our budget. The fact that marketers are almost constantly hyping their products doesn’t help especially when the modern consumers are digital savvy. Consumers find online shopping convenient and it becomes a shopping spree as one has his or her credit card within reach.
In the end, many Singaporeans get in debt and struggle with astronomical credit card bills as a result of overspending. Credit card debts in Singapore have known to be on a rise dangerously and most of the cardholders in debt are aged 21 to 30. Crucially, the victim will find it harder to meet their financial goals due to the tendency to breach their budgets.
So, why are people living beyond their means? What prompts one to go on a spending spree?
1. Influence From Social Media – Instagram, Facebook and More
Liking, tweeting and adding to one’s story on social media is fun and an important part of socializing in the digital age. Being widely available on mobile devices, computers and more, social media has become a necessity in some people’s lives.
Online marketers have also caught up with the trend and has made social media websites such as Facebook their hunting ground. One will realise that the advertisements never stop until they click on the “buy now” button. With good descriptions, eye-catching photos and credit cards, temptations are hard to resist.
Also, social media channels fuel competition between friends or followers where each is fighting to post the nicest photo of themselves, their newest car, achievement or holiday to attain the most number of likes. In turn, the rest will feel obliged to do something similar as they are driven by FOMO (fear of missing out). One may splurge on branded items just to keep up with the jones, or purchase unnecessary goods that they do not need and exceed their budget.
2. Ignorance is Apparently Not Bliss
The consumer who firmly believes that tomorrow will take care of itself. They argue that how they spend their money today has little bearing on their future fortunes and will only stop when their last dollar is gone.
They are usually unaware of how impulsive they are when purchasing goods and fail to recognize the difference between needs and wants. It is important to know how to plan and budget one’s money before it becomes too late and they find themselves in a deep economic mess. Budgeting and financial planning are definitely important skills that one should acquire. There are many guides online that can help with money planning.
3. Being Overly Concerned With Social Standing
Away from social media and the internet, certain people will do everything they can to appear successful – even when they are really struggling.
They will purchase goods that are out of their means or choose a lifestyle that they cannot afford. For instance, they may take a loan to buy a house in an influential neighborhood such as Orchard/ Central region of Singapore where homes cost humongous sums. They may also splurge on branded goods because they want to appear of higher social status.
Their race to keep up with the Jones will make them spend further on prestigious cars in addition to taking their kids to the same expensive school as Jones’ children. It is a never ending cycle of overspending in order to appear successful. This results in a high chance of them getting into a debt as they might be unable to pay their bills.
4. Not Bargaining, or Feeling Too “Paiseh” to Bargain
Many don’t realize it but learning the art of haggling can help to save big money in the long run. Sometimes, “buay paiseh” is the way to go.
Failure to bargain on credit card interest, legal/ medical bills, property deals and even purchases at shopping malls/ marts means that one might be paying more than they should. Without negotiating, one might be paying at a highly overpriced rate. It is possible to slash the prices by half in some cases.
Warren Buffet, the affable American Billionaire has always stressed on negotiating for everything until the other party can’t take it.
5. Failure to Compare Prices Between the Goods
Hasty buying behavior also leads to expending higher amounts. The same item could be retailing at different prices at different stores.
A good example is coke. A can of coke is a lot cheaper at Value Dollar as compared to supermarkets such as Cold Storage. Long term or large purchases of such goods will cause increased unnecessary spending.
When buying a car, car dealers often seek to undercut each other by offering lower prices.
Also, some supermarkets or stores will give hefty discounts during the so-called “happy hour”. However, if consumers do not bother to compare prices or take note of the limited deals, they end up overpaying for many items.
6. I can afford these ‘Small’ Subscriptions
Do not ever belittle subscriptions for they represent a fixed amount of money leaving your pocket every month.
The common subscriptions in Singapore include Netflix, Spotify Premium, Amazon Prime, Gym Membership or other memberships for shopping websites and clubs. When one signs up for monthly subscriptions, they are usually pay a low price for a lot things. This is encouraged by the good prices or by the many benefits the subscriptions come with.
However, all these subscriptions can add up to a rather large part of one’s total cash outflow. In the long run, some may even be too busy to cancel the subscriptions when they don’t need it anymore, wasting their money.
7. The Love for Coffee and Too Many Coffee Dates
There is no doubt that many Singaporeans love coffee and some are even frequent café hoppers. Some believe that coffee is the fuel that keeps them going or some just need a cup of coffee every day.
However, a nice cup of coffee isn’t exactly cheap in Singapore. Generally, it costs at least $5 or even more for a cup at Starbucks. Cumulatively, the average Singaporean coffee lover can spend hundreds of dollars on the drinks every month.
8. Pursuit Of Hobbies
Hobbies are a great way to escape from the everyday routine and engage in something that’s truly exciting. This serves as a great relief for both students or working adults as they are able to take a break from their stressful lives.
But sometimes, these hobbies can be costly and expensive to sustain. Photography, skydiving and hiking are thrilling pastimes but cost significant amounts. Other hobbies such as music or dance are expensive as well. Yet, it is sometimes difficult to resist the lure of the activities.
9. Failing to Compare Phone Tariffs, Phone Plans and Contracts
It is estimated that there are around 8.3 million subscribers in Singapore. With new Telcos and new mobile plans, the cheapest SIM Only Plan costs about $15 per month. Other plans with other features can go up to $98 per month or even more.
But some locals fail to perform a thorough analysis of their tariff plans vis-à-vis their need and in the process, end up throwing more money than they should to the Telcos.
10. Spoiling the Party
Birthdays and other celebrations ‘call’ for one to spoil themselves by ordering exquisite items. They may throw parties that cost a huge amount. On top of this, individuals purchase expensive gifts for friends and relatives.
Another example is when friends or colleagues decide to dine at expensive restaurants or purchase highly priced gifts to share and one may be too “paiseh” to reject.
Overspending happens to many Singaporeans and for some, it is uncontrollable. It becomes hard for them to cope financially and we all know how important it is to manage our own finances.
However, not to worry! One can always start changing their spending habits and start saving or investing. As one has identified their root cause of overspending, they can learn how to reduce their outflow and make the best of their money!