Mr Michael Tan, 32, used to spend freely. Fancy dinners with friends? Sure. Cafe lunches with colleagues? Why not?
But that was before inflation began to bite. “I wasn’t tracking my spending, but I started noticing that I had less money in my bank account at the end of each month last year.”
“It made me uncomfortable,” says the communications executive, who is single and lives with his family in a four-room Housing Board flat.
Core inflation in Singapore, which excludes private transport and accommodation, reached a peak of 5.5 per cent in January 2023. It eased to 2.7 per cent in August.
For Mr Tan, the wake-up call came when he received his credit card statement. He had spent more than he expected, and needed to use all the money he had set aside for essential expenses to pay the credit card bill in full.
That was when he decided that it was time to cut back on his spending.
A recent survey shows Mr Tan isn’t alone in tightening his belt; 43 per cent of Singapore residents say they have spent less on non-essentials due to inflation, according to the UOB Asean Consumer Sentiment Study 2024.
The study, in May and June, polled 1,000 Singapore residents between the ages of 18 and 65.
Not everyone coped by spending less. The same study found that nearly 1 in 4 (23 per cent) say they set aside less money for savings, investments and insurance instead.
“Without adequate savings, consumers may need to rely on high-interest rate loans or credit to cover medical emergencies or job loss,” says Mr Abel Lim, head of wealth management advisory and strategy at UOB.
Reducing your investments also means missing out on the benefits of compounding returns, he says, which could delay retirement or force
