Singaporeans are lovers of discounts; when there is one, there will always be a large crowd in-line. We love getting bargains, and that’s why so many of us like to cross over the causeway to Johor Bahru for cheaper food and groceries.
However, have you wondered why a weekend to Malaysia cost you $200 when you would have spent less than $50 had you stayed at home? Shouldn’t the weak ringgit give us a great bargain when shopping in Malaysia? Surely something must be wrong!
The truth is that most of us may be caught up in the illusion of discounts — spending more than we would have because we wanted to get some bargain.
In this post, we shall discuss three rules that consumers should stick to avoid the illusion of discounts, and start saving money.
1. Consider the entire cost of the purchase
Have you ever had friends who think that they are saving money by going to Thailand to buy all their clothes or to tailor-make some of them?
It might be true that a tailor-made shirt is a lot cheaper in Thailand than it is in Singapore, but the cost of the entire trip — including airfare, accommodation, daily expenditure can quickly add up to a few hundred dollars.
If you were not going overseas already, going abroad specifically to get something done “cheaper” can be more expensive. Therefore, we should be considering the entire cost of the trip to decide if we still think it’s worth it to buy the cheaper products abroad.
Another relevant example is when we travel around Singapore just to go to the best money changers in town.
Of course, we will want to be getting the best rates available, so we should go the extra mile to get it… right? Well, since many of us are only going for short trips abroad and may not be changing that much money, the difference may actually be quite insignificant.
Consider someone who wants to exchange $500, SGD to USD. If the rate at the nearby neighbourhood moneychanger was S$1 to US$1.4, and the better ones at Orchard road goes for $1.39, the difference will be about US$2.55, which is just about SG$3.55.
The train ride to and fro can easily cost up to $3, not taking into consideration the time needed to travel. In the end, we are only gaining about $0.5 when we took an entire hour more to make the transaction.
It will only be worth it if the difference amounted to a more significant sum that will justify the transportation cost and the time involved.
2. Only buying what we need
“Buy-two-get-one-free” can be a desirable deal that will entice you into getting three packets of chips despite being on a “diet”. It’s cheaper if I buy more, why miss out on such a great deal?
However, when we purchase items that we do not need, we may end up throwing them away when it expires or giving these things away. That is particularly the case for food items that have a relatively short shelf life.
If you are the only one who drinks fresh milk in the family, getting two cartons at a 15% discount will not equate to saving money if it turns sour before you finish it.
Hence, when we are in a dilemma of whether we should be buying more because there’s a discount, we should always consider if we will finish using the products before their expiry date, and also, if we will actually need that much of a product.
3. A penny saved is a penny earned
The grab car top-up discounts given was very attractive, and many people started taking “free” taxis by making use of a great deal.
The top-up scheme, which went on consecutively for several weeks, provided discounts off all rides (except GrabShuttle and GrabHitch) for users who have topped up their GrabPay accounts with a specified amount (usually between $30 to $50) which must be spent within a year.
The discounts given were so attractive that most of the weekly promotions were fully-redeemed. Instead of walking for 10 minutes to go home from the MRT station, we could be taking a discounted ride instead and not have to fork out a single cent, what a great deal!
However, one should certainly consider if these rides really “free”. Instead of thinking that we are missing out on free rides, why not consider that you will be saving at least $30 (the top-up amount) by not participating in the scheme?
Another great example would be how Singaporeans love to cross over to JB to buy things at a discount. If you’ve realised that going there always burns a hole in your wallet, you are not alone.
Though some things are indeed cheaper there, we also tend to spend more on things that we do not usually spend on. Take for example, eating at fancy restaurants or buying tons of facial products.
All these add up to a considerable sum which is why a weekend in JB may be more expensive than in Singapore where you do not buy anything.
Of course, the happiness gained with the slightly more luxurious experience abroad is priceless, but having more savings in the bank can also help us to have peace of mind too.
Indeed, a golden rule to remember is that a penny saved is a penny earned, no matter how attractive the discount. If we do not usually buy that item or pay for that service, we might still not be “saving money” by doing it at a discount.
Try not to be fooled by the illusion of discounts the next time you see a great sale going on and try to save some money instead.