By Ryan Ong
Saving money can do things to your brain. And no, I’m not kidding: There’s a reason for the whole psychology of misers, which we’ve known for at least a century. See, your brain is wired to think anything worth doing is worth overdoing. It’s like drugs, dieting (i.e. anorexia), and petty budgeting. On occasion, I see penny pinching tactics which, despite making sense on the surface, end up wasting thousands of dollars. Here are five of the most common in Singapore:
1.Saving Without Investing
Both I and Mr. Tan Kin Lian have mentioned emergency funds. That is, six months worth of savings in a bank account. As it turns out, Singaporeans are pretty enthusiastic about this; like Sub-Saharan scavengers, we’ll build a reserve and never touch it. Not even if it comes to boiling our own toenails for supper.
The problem is, we don’t know when to stop. Plenty of Singaporeans cross the six month mark, and then decide “forget investments, I might lose money. Better keep dumping all the cash into the emergency fund, forever.” Gradually, the “six month” fund transforms into a sub-par retirement plan. Then low interest and high inflation kick in, and the fund’s value starts diminishing at a monstrous rate. When retirement does come around, we’re left wondering where all the money went.
Saving without investing is losing money. There is no way $2000 now will be worth $2000 in ten years.Every year you leave money in a savings or current account, inflation chews up a percentage of your total wealth. So stop once your emergency fund is built, and start investing instead.
2. Going to the Dentist Only When Desperate
Despite the Health Promotion Board’s (HPB) recommendations, most Singaporeans insist dentists are for emergencies only. We’ll drop by when we have a toothache, but beyond that, bleeding isn’t high on our list of hobbies. Nor is having to pay $60 – $120 to hear we should brush more often.
Too bad plaque and cavities accumulate with time…so that when we do rush to the dentist, they find damage that’s less reversible than Bush’s election. Did you know an operation like a root canal, which may come from, oh, not regularly seeing the dentist, can hit the $10,000 mark?
And I haven’t even started on the cost of extractions, implants, or hundreds of expensive procedures; all of which can be avoided with two to three visits a year.
3. Buying the Cheapest Insurance Plan Possible
For most Singaporeans, insurance is something we’re forced to buy. Like car insurance, home insurance, etc. The only thing we look at are the premiums. Actually asking for more coverage is alien to us; like volunteering to extend our NS, or requesting extra fines from a traffic cop.
Then when the car gets trashed, or a stove sets the kitchen on fire, the SCDF gets called in twice. Once for the accident, and the second time for when we see the repair bill and pop an artery. Fact is, increased coverage may just add $50 – $100 to insurance premiums. And if you know there’s a real risk, that extra amount is probably worth it.
Are you really so poor that another $50 – $100 would deprive you of three full meals? If not, buy the increased coverage. Or you just might find yourself in that situation.
4. Unnecessary Bulk Buying
Singaporeans are big on packaged deals. We can’t grasp the concept of buying just what we need. Even if a Singaporean is living alone and suffering from Asia’s worst case of constipation, he’d still buy a 12 toilet roll pack instead of a six. Because hey, it saves money! It’s a $2 discount! And we’ll apply the same principle to canned food, bags of peanuts, hair bands, etc. Then when our houses are filled to bursting, usually with expendable items that won’t keep, we start buying storage.
Maybe if we didn’t buy so much unnecessary junk in the first place, we wouldn’t need 10 extra cupboards and enough Tupperware to store Somalia’s food supply. And when we hit the absolute spatial limit that physics allows, we start the wasteful process of dumping everything. We may as well skip a step and feed dollars into a shredder.
5. Pushing the Car to Its Absolute Limit
Hey, what’s that funny grinding noise from the car? Ah, never mind, as long as it moves. Because taking it to the mechanic always costs money right? Or the mechanic will tell us about non-existent issues; like the giant crack in an axle, or a broken fan belt, or the possibility that we’re driving a soon-to-be fireball on the express way.
If you recognise the attitude, then you’re the average Singaporean driver. Most of us would rather live with sticky gears or clanking noises than pay for servicing. In fact, some Singaporeans even avoid free servicing with their car dealer; because not having a car might mean cab fares.
The problem is, cars aren’t organic. Their little stress fractures, unlike flesh and bone, don’t magically knit back. They just get worse. And if we keep pushing, problems start to multiply like bacteria in an NS Man’s socks. In a matter of months, something like a bad fuel injector could end up wrecking the entire engine…and then we’d go from saving $1,000 to blowing $30,000.
Ultimately, wanting to save isn’t a bad attitude. But it has to be done with some foresight: Don’t just look at how much is going into your wallet; think about potential costs, and weigh them against your immediate gains.