By SingSaver.com.sg
Some situations make you more likely to spend than others. Watch out for your wallet under these circumstances.
It’s said that personal finance is 80 percent psychology and 20 percent numbers. There’s a ring of truth to that. After all, if it were simple maths, everyone would save diligently and make good financial decisions.
And yet, we wage an eternal war against impulse spending and debt. When you find yourself in these situations, be extra careful about your money, as this is when you are more likely to spend:
1. When You Pay a Huge Bill From Your Savings
Let’s say you’ve saved up S$50,000 after three years of effort. You’re proud of having the discipline to build this emergency fund. But suddenly, disaster strikes – you need to pay for a medical emergency for a family member, and it costs you S$47,000.
What will you do with the last S$3,000? The logical response is to save up again and gradually build an emergency fund. You should be glad that this disaster won’t greatly impact your lifestyle, as you had the cash to deal with it.
But in reality, the opposite is just as likely: some people will decide the remaining S$3,000 hardly matters and will spend it all in a demoralised fit. Since the savings have now been ruined, there’s no need to keep the remainder; they’ll just spend it and start again from scratch later.
This doesn’t just affect savings. The same phenomenon happens at a cashier: if you just spent S$148 on groceries, and you see a candy bar for S$2, you’re much more likely to just throw it in (as opposed to if you walk up there having spent nothing, and wanting to retain your S$150).
This happens because we’re sometimes demoralised after a big financial loss. This causes us to just give up, as it seems that all our planning and effort were for naught. As such, we spend the rest of the money on feeling better, rather than immediately ramping up attempts to save again.
This is why when something wipes out your savings, your first trip should be home. Give yourself a few days to get over it, before you allow yourself to shop. If you don’t, you may impulsively end up up blowing the remainder of your savings.
2. When You Are in Unfamiliar Surroundings
Have you ever returned from a trip abroad and wondered about all the junk you wasted money on? Don’t worry; you’re not alone. It’s called the ‘tourist effect’, in which people buy things they wouldn’t normally buy, from fear of scarcity.
In economics, scarcity value means we pay more for items that are not widely available, often in large disproportion to its actual usefulness. For example, we pay far less for water than we do for gold, even though water is much more essential. We also pay more for a limited edition watch, even if it’s functionally no better than a regular watch.
When you are touring another country, everything is imbued with scarcity value. You assume that, whatever it is you see in the shop, there is a high chance that you ‘can’t get it back home’. This causes you to buy it, even if the price doesn’t match its utility. Souvenirs are a good example – most end up collecting dust at home.
This is why it’s important to impose a disciplined spending limit when you are abroad. Use the internet to determine if what you’re seeing can be ordered from Singapore (90 percent of the time, it probably can), and don’t rush to buy.
If you must shop while overseas, use an air miles credit card that rewards you for spending in foreign currencies. This way, you’re at least earning miles that can be used to offset the cost of your next holiday.
3. When You Shop While Hungry
Have you noticed most people tend to buy before they eat, when they step into a mall? There’s now some research on that, which shows you are more likely to spend when you’re hungry.
The apparent reason is that it activates old behavioural traits, which causes us to hoard and gather things when we’re hungry (that would be how our ancestors survived in the past). This same ‘hunger switch’ makes us acquisitive, and more likely to buy before we eat.
Given that many cafes and restaurants are located in shopping malls, you can see how even a little detour could empty our wallets before dinner. The best way around this is to eat first. Grab your dinner, and then handle your shopping. You’ll buy less that way.
4. When You Feel Sad
When we feel sad, two things happen. The first is that we tend to devalue ourselves and our prospects (e.g. I have no future, none of it matters anyway). The second is that we try to make ourselves feel better, at least temporarily, by spending.
Studies have shown that sad or depressed people are more likely to overspend. This is why it’s advisable not to shop in such an emotional state. Retail therapy becomes expensive, when you literally use it as your form of therapy.
It’s also important to note that no amount of spending is likely to end the sadness. That takes times, especially if it’s something like a break-up. Don’t spend yourself into oblivion trying to get rid of the negative feelings.
5. When the First Thing You See is Expensive
This is also called ‘anchoring’. The first number you see sets a price expectation, so the second number has a bigger impact on you. For example:
Say you are speaking to a contractor about repairing your house. The first quote given is S$45,000, which leaves you in cold sweat. But after walking around and looking, the contractor says it’s not so bad; the repairs can be done for just S$20,000 after all.
Odds are you’ll be so relieved, you’ll sign and pay on the spot. Of course, what you might not know is that the proper price is S$18,000.
Alternatively, this trick can make you accept a higher cost. For example, if the first thing you see on a restaurant menu is S$128, you know you’re not looking at a cheap cafe. You will be considerably less shocked when the follow-up items are all in the range of S$90.
Remember to take a step back and gauge purchases based on your financial situation. Disregard the first number and look at the other options carefully.
Singsaver.com.sg, Singapore’s go-to personal finance comparison platform, guides consumers on the best money habits with its credit card comparison tool and allows real-time personal loans product comparison.

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