They say time is money but when it comes to investing, time is actually wealth. In Singapore’s fast-paced economy, understanding the magic of compound interest can be the key to financial freedom. So, how does it work?
POWER OF COMPOUNDING
Think of compound interest as a snowball rolling down Bukit Timah Hill small at first, but growing bigger as it gains momentum. In finance, this means your initial investment earns interest, and that interest starts earning more interest over time. The longer you leave your money to grow, the bigger the effect.
Let’s say you invest S$10,000 at an annual return of 5%. In a year, you’ll have S$10,500. But in the second year, you’re earning interest not just on your original S$10,000, but also on the extra S$500, bringing your total to S$11,025. Fast forward 20 years, and your initial sum has nearly doubled without you lifting a finger!
WHY START NOW?
Singapore’s CPF system already takes advantage of compounding, but you can supercharge your wealth with investments in ETFs, stocks, or savings plans. The trick? Start early and stay consistent. The longer you let your money grow, the more time does the heavy lifting for you.
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So, whether you’re saving for your first BTO or early retirement, remember: wealth isn’t just about how much you earn it’s about how wisely you let time work for you.
Luxury has long been associated with exclusivity, craftsmanship, and status. But beyond the gleam of designer handbags and the allure of high-end skincare lies a deeper psychological pull.
Why do we crave luxury? Let’s break it down.
#1: BECAUSE YOU DESERVE IT
In a world where burnout is practically a badge of honor, luxury becomes a form of self-care. With constant stress, low wages, and an endless stream of bad news, splurging on something expensive can feel like a well-earned escape.
This phenomenon, known as hedonic consumption, explains why people turn to luxury goods as a way to soothe themselves. It’s that fleeting moment of indulgence where owning a designer piece makes you feel like a celebrity, even for just a second.
Admit it, we’ve all justified a splurge by telling ourselves: “Money will come back. I deserve this.”
#2: KEEPING UP WITH SOCIAL MEDIA
Social media has turned luxury into a never-ending trend cycle. One minute, it’s a Bottega Veneta bag; the next, it’s the latest “It” shoe. Don’t get me started with watches! With influencers flaunting high-end hauls and celebrities celebrating milestones with designer splurges, it’s easy to feel like luxury isn’t just a want.
Platforms like Instagram and TikTok fuel this culture with hashtags like #TreatYourself and aspirational content featuring curated skincare routines, extravagant “galentines,” and designer-filled shopping sprees. The message? Indulgence is essential to self-care.
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#3: LUXURY IS THERAPY
Luxury shopping isn’t always about status as it’s often about emotional regulation. Research by Selin Atalay and Margaret Meloy (2011) found that people in a negative emotional state are more likely to splurge on luxury goods, hoping to boost their mood.
But here’s the catch: while shopping might offer temporary relief, the guilt that follows can sometimes outweigh the initial excitement. Harri T. Luomala’s study (2002) found that excessive spending can ruin an already content state of mind, making it a double-edged sword.
#4: IRRATIONALITY OF LUXURY
Luxury shopping isn’t always rational. A well-made, durable handbag can cost around S$100, yet many willingly drop thousands on a designer version that serves the exact same purpose.
Why? Behavioral psychology suggests that luxury purchases often stem from an emotional rather than logical place. It’s about perceived value, exclusivity, and the status attached to the brand (sometimes more than the actual product itself).
#5: LUXURY AS SOCIAL CURRENCY
Luxury is often more than craftsmanship and quality—it’s a status symbol. Many people buy designer items not just for their design but for the brand’s logo, a clear signal of wealth and success.
The downside? Some stretch their finances thin to keep up with the illusion, falling into debt just to own a coveted piece. Luxury can be aspirational, but for some, it becomes a financial trap.
#6: NEED FOR UNIQUENESS
At its core, luxury is about exclusivity. Being able to afford it already puts you in a minority, making it feel even more special.
Wealthier consumers often gravitate towards brands that exude authenticity and timelessness, reinforcing the idea that true luxury is about more than just a price tag.
IN A NUTSHELL
While there’s nothing wrong with indulging, understanding why we crave these things can help us make more mindful, guilt-free choices. So the next time you feel the urge to splurge, ask yourself: Is it about the product, or the feeling it gives you?
Understanding your financial personality can help you make better money decisions. Here are four common types and some tips for each:
#1: CONFIDENT MONEY MANAGER
You’re excited about managing your finances and likely a long-term thinker and planner. You prefer traditional strategies like having a retirement savings plan and planning future investments. However, you might struggle with seeking a second opinion, moving too quickly, or overanalyzing options.
Questions to ask yourself:
1. Do I regularly review and update my financial plans?
2. How comfortable am I making investment decisions on my own?
3. Do I have a detailed retirement savings plan?
4. How often do I seek advice on financial decisions?
#2: SHORT-TERM STRATEGIST
You’re a careful planner who does thorough research, often taking your time to make well-informed decisions. Flexible and adaptable, you focus on short-term goals rather than long-term ones like retirement. As a strategist, you might miss opportunities by over-evaluating options. Creating timelines or automating finances can help.
Questions to ask yourself:
1. How often do I adjust my budget based on changing situations?
2. Am I more focused on immediate needs than long-term goals?
3. Am I comfortable researching before making financial decisions?
4. How frequently do I automate my savings?
#3: VALUE-BASED PLANNER
You’re future-oriented, charitable, and make financial decisions based on your values. You prioritize donating to charities but may neglect your own daily finances. Consider working with a financial advisor to stay on top of your finances.
Questions to ask yourself:
1. How often do I prioritize charitable donations in my financial planning?
2. Do my financial goals align with my values?
3. Am I proactive about supporting causes that matter to me?
4. How regularly do I review my daily finances?
#4: LAID-BACK BALANCER
You have a relaxed approach to money, prioritizing living your life and intuition over strict budgeting. You keep an eye on your money but may not be up-to-date. Financial planners and advisors can help. It’s important to stay informed and set future goals. Budgeting apps for beginners can make this easier.
Questions to ask yourself:
1. How comfortable am I without a strict budget?
2. Do I rely more on intuition than planning?
3. How often do I review my overall financial status?
4. Am I open to using budgeting apps to track my finances?
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SIMPLIFIED CATEGORIES
If you find these categories complex, consider these simplified types by Dean Deutz, a private wealth consultant at RBC Wealth Management:
A. Savers: Prioritize saving now to enjoy financial security later, often paying off debts like mortgages early. They should balance caution with potential high-return investments, seeking diversified portfolios that align with their long-term goals.
B. Spenders: Enjoy their money presently, often borrowing and saving less. Spenders benefit from reducing discretionary spending to increase savings and build emergency funds for future financial stability.
C. Sharers: Enjoy sharing money with family, friends, charities, or their community. They should manage their generosity wisely, setting clear boundaries and budgets to sustain their giving while ensuring their own financial health.
Understanding your financial personality can clarify your decisions, reveal patterns in your financial habits, and highlight areas for improvement to achieve greater financial well-being over time.
In August 2023, the Singapore government will implement an enhanced Goods and Services Tax Voucher (GSTV) – Cash scheme to assist approximately 1.5 million Singaporeans with their living expenses. This initiative, announced by Deputy Prime Minister Lawrence Wong during the Budget speech earlier this year, aims to alleviate financial burdens by offering cash aid of up to $700. Let’s explore the details of this program and how eligible individuals can benefit from it.
Under the GSTV – Cash scheme, eligible citizens will receive a one-time cash payment in August 2023. Compared to the previous year, the enhanced scheme will provide up to $300 more, with a total potential payout of $700. This initiative is part of the government’s ongoing efforts to support lower-income and elderly Singaporeans by assisting them with their GST expenses and cost of living.
Streamlined Payment Process
To simplify the payment process, the Ministry of Finance (MOF) will replace cheques with GovCash for individuals who have not provided their bank account information or linked their NRICs to PayNow. GovCash recipients will receive a payment reference number at the end of August, which they can use to withdraw their GSTV – Cash and GSTV – Cash Special Payment at OCBC ATMs across the island. Importantly, recipients do not need an OCBC bank account to withdraw the funds at these ATMs.
Furthermore, GovCash recipients can utilize the LifeSG app for payments to merchants by scanning PayNow or NETS QR codes. They can also transfer funds to their bank accounts through PayNow if they subsequently register for PayNow-NRIC. These measures aim to provide convenient and accessible options for individuals to manage their funds effectively.
MediSave Top-ups
In addition to the GSTV – Cash scheme, eligible Singaporean adults aged 65 and above in 2023 will receive MediSave top-ups through the GSTV – MediSave program. Approximately 624,000 individuals will receive up to $450 credited to their CPF MediSave Accounts. This top-up is part of the 5-Year annual MediSave Top-up initiative announced during Budget 2019 and represents the fifth year of contributions. Eligible Singaporeans born on or before December 31, 1969, who do not receive Pioneer Generation or Merdeka Generation benefits will benefit from this scheme.
Future Support
The Ministry of Finance has assured Singaporeans that additional support will be provided throughout the second half of 2023. This includes top-ups to the Child Development Account, U-Save and S&CC rebates, and the Assurance Package Cash.
Checking Eligibility and Payments
Singaporeans who have previously signed up for government disbursement schemes and are eligible for the GSTV scheme can check their allocated GSTV – Cash and MediSave amounts by logging into the official GSTV website using their Singpass. Individuals who have not registered previously will receive notifications via the Singpass app, SMS, or hardcopy letters sent to their NRIC address by the end of August 2023.
To ensure timely payments, individuals should sign up for the GSTV scheme by July 10, 2023, to receive their payment in August. Those who sign up between July 11 and August will receive their payment in September 2023. Individuals who sign up after September will receive their payments by the end of the following month. The deadline for signing up for the 2023 GSTV scheme is April 30, 2024.
Preventing Scams
To safeguard individuals against scams, the SMS notifications sent by “GSTV” will solely provide information about their benefits. Recipients will not be required to reply to the SMS, click on any links, or provide any personal information. It is important to note that no messages regarding GSTV will be sent through WhatsApp or other mobile app messaging platforms.
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BOTTOMLINE
The enhanced GSTV – Cash scheme introduced by the Singapore government aims to alleviate financial pressures and provide essential support to 1.5 million Singaporeans. By providing cash aid of up to $700, the government strives to assist lower- to middle-income individuals in covering their living expenses. With simplified payment methods and future support planned, Singaporeans can access the financial relief they need during these challenging times.
Money issues are some of the main reasons why people end up in divorce court. Money is a touching subject that plays a vital role in any household. If you have enough money, you will be able to meet your basic needs and have some measure of happiness.
There are many reasons why couples have trouble communicating about money. Here are some of them:
#1: DIVERSE MONEY EXPERIENCES
Some Singaporeans have opportunities to learn money management skills growing up; many did not. Money is tight for some, so as adults, people may take steps to avoid the consequences of not having enough money.
How money matters were discussed and handled in previous relationships will affect how people handle their money in their current relationship. Learning how to make wise choices is important.
#2: DISSIMILAR COMMUNICATION STYLES
There are different communication styles that people typically use. While some are passive, others are aggressive. Passive communicators avoid expressing their thoughts and feelings about money. They often feel resentful, anxious, or even hopeless. Aggressive communicators overly express themselves in a powerful manner. These people dominate money conversations.
Lastly, assertive communicators share their thoughts and feelings respectfully. These people know how to listen and reflect on what they are hearing from the other person. Aim for this type of communication style.
#3: DIFFERING MONEY VALUES
When it comes to finances, we tend to spend money on things we value. For instance, a person who values security spends his money on insurance. If someone values freedom, he may throw caution to the wind with their money and spend impulsively.
We decide what our values are through experience, which means they could change throughout our lives. Some factors that influence our values include our educational background, culture, age, gender, socio-economic conditions, marital status, and other expectations.
#4: NEED FOR CONTROL
If you are in a relationship where both people want to be the head of finances, problems can ensue. Different ideas of how control looks like affects how we see our financial futures. Some of us have more controlling personalities than others. However, what if both of you are controlling?
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#5: INCOMPATIBLE SPENDING HABITS
If she likes to eat out and you like to cook at home, the two of you do not see eye to eye about how to spend money on food. Discuss household responsibilities and learn how each other feels. Find a middle ground where you both compromise.
#6: COMPETING SAVING HABITS
A saver and a spender can have different dynamics at home. The saver needs to understand that the spender wants to live a comfortable life, while the spender needs to be more careful and realistic with money.
#7: DISPARITIES IN INCOME
It can be challenging to get along if one person earns substantially more than the other. One of the best solutions for this situation is to let each person pay for bills based on the percentage of total income they earn (per month).
Do not let these seven elements become obstacles that get in the way of your relationship. Create a schedule for regular money discussions.
Anna Agoncillo
