No Cash, No Pain? Essay

Imagine this: You are casually browsing through your favorite clothes shop when you chance upon an item that catches your eye. You excitedly search for its price tag. It says “fifty-percent off”. Without hesitation, you grab the outfit from the shelf and head to towards the nearest counter. In that moment, you realize something. You don’t remember how much you have left in your card but you go for it anyway, only to get it declined… What a bummer.

Overspending makes you forget how much money you have Sounds familiar? Let’s be honest. Do you remember the last time you tracked your spending? Well, neither do I…Controlling the urge to spend on unnecessary items is surprisingly difficult, isn’t it? Well, you are not alone. With the process of financial transactions being simplified to a mere swipe of the card or touch of the screen, overspending is becoming a prevalent problem among our young adults today. According to ClearScore, more than half agreed that making cashless transactions has caused us to spend more. But why is that so? The Illusion of “Less Pain”

With the physical exchange of notes evolving into something “invisible”, parting with our money becomes significantly easier. According to a journal of experimental psychology, it argues that the less transparent the payment outflow, the lower the “pain of paying”. Cashless payment perceived to be “less painful”. Coupled with the convenience offered from more outlets accepting cashless payments, it is no wonder that spending beyond our means is an increasingly frequent occurrence. It is precisely because of this that an increasing number of young Singaporeans are landing themselves in credit card debt.

Credit card debt is the fastest growing type of consumer debt in Singapore. According to the Monetary Authority of Singapore (MAS), monthly billings per card have been rising sharply between 2015 to 2018, reaching a peak above $500 this year. In addition, banks wrote off a whopping total of S$128.3 million in bad credit card debt from January to May this year. This not only highlights an increasing dependence on credit cards, but more importantly the poor financial management habits of Singaporeans. Now you may ask, is this really such a serious problem?

Spend First, Worry Later?

Many of us do not realize the importance of nurturing good financial management habits early to secure ourselves a good retirement. Upon hearing the word “retirement”, one may think of it as stage of our lives found in the very distant future. After all, it is still “too early” and there is “a lot of time” to figure that out later, right?

This is where the problem lies. To “plan” literally means to make arrangements for something in advance. Beforehand. Ahead of time. According to a study by Manulife, most Singaporeans only start planning for retirement at 38 years old. The harsh reality is this: to start planning your finances at 38 is rather late. As a result, only two out of five Singaporeans feel ready for retirement.

Now, this is before factoring in increasing average life expectancies and inflation over time. Can you just imagine the shocking statistics once we account for these two out of so many other variables involved? That would mean a lot more of savings needed to last us through our golden years. If we do not start saving right now, then going cashless may prove to be a greater financial woe in the long run.Elderly unable to retire.

How now, brown horse? Easier said than done, right? As a young adult myself, I shamefully recall the countless times I made the resolution to painstakingly record my expenditure in a notebook, only to fail miserably and abandon such a feat. It was just too much effort and needless to say, not very enjoyable. God knows where that notebook is…It was not only until recently that I met an ex-classmate who showed me how to live up to such discipline by infusing an element of fun into expenses tracking. With her simple recommendation of a budgeting application that tied expenses tracking to city building, what seemed to be a constant struggle transformed into something I actually looked forward to.

It was a miracle. And we all lived happily ever after. The end. Slow and steady wins the raceAs much as I would like it to have been as such, I have to admit that overspending is not a complete thing of the past yet. However, making the effort to do something about it has definitely helped to reduce such occurrences gradually. As the saying goes, “consistency is key” to breaking bad habits and forming better ones.

Perhaps the use of a budgeting application may not suit you. Nonetheless, it is important to discover your own way of keeping track of daily expenses be it through occasional self-rewarding or keeping physical cash at hand. As long as we take that step forward towards managing our finances – no matter how small – we are making progress. And I mean it mathematically as well with the power of compounding interest. Going cashless does not have to be a bad thing. But are we ready for it?

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