A traditional view

Save for a rainy day; but rain or shine Singaporeans have been spending conservatively and saving generously, according to a BBC report. Amidst Orchard road's glamorous redevelopment, and 2009's brisk economic growth, consumption has remained cautious. This is not surprising. Public opinion here prizes thrift, and has long held that high saving makes the sinew of financial virtue.

An alternative view

Popular as it may be, this perspective may not be optimal.

Research by consumer psychologists from Columbia and Harvard indicates that over-saving is not only possible, it can undermine happiness much as under-saving does. "People feel guilty about hedonism right afterwards, but as time passes the guilt dissipates," Dr. Kivetz of Columbia Business School told the New York Times. "At some point there's this reversal, and what builds up is this wistful feeling of missing out on life's pleasures."

Worse, Singapore's exceedingly low rate of interest on deposits and recent bursts of inflation give over-saving more bite than in other countries.

A re-look

The time has come to look past high saving’s ginned up reputation.

If you don't have high-interest debt, and you've come into disposable income, making that trip out to Ion might be the responsible financial choice. Splurging on experiences, like vacations, or high-use goods, like a wristwatch you wear daily, give better satisfaction for money. Set aside a portion of your monthly non-CPF savings for something you want to buy in a half-year, instead of three decades.

A playful jolt to spend

Older Singaporeans form the most willful over-savers, intent on transferring their wealth and home to their mature children. I have a surefire remedy for that particular vein of recalcitrance - tell them you want to use the money to fund a new career- as a professional gambler once the IR s open !


By Sivanesh Sivarajan

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