Young & Savvy

It pays to watch your spending this CNY season

Saving is now a central theme in my life amid uncertainty in the global economic landscape


I spent the past two weeks toying with the idea of taking a trip over Chinese New Year.

This would mean missing out on the red packets, or hongbao (which really is the best part of the festive season), but the idea was to make use of the long weekend to take a breather somewhere else - for a different experience, and without the festivities.

Still, all of my thought processes always boil down to one simple conclusion: "Don't do that, save money."

Saving has unwittingly become a central theme in my everyday life in recent months - likely shaped, I believe, by the growing uncertainties in the global economic landscape.

In any case, travelling during the festive holidays is more expensive than I thought. A return ticket to Bangkok on a budget carrier that leaves Singapore on the eve of Chinese New Year, for example, costs at least $526, going by a quick scan of airfares online.


The same ticket, in off-peak periods, could be just one-third of that price or cheaper.

A friend told me that he blew $600 on a plane ticket to Phuket, along with $3,200 on a four-night stay at a villa there, where he will be spending Chinese New Year with his family. (Ouch.)

Then again, flight ticket prices tend to fluctuate from time to time, as do accommodation prices, thanks partly to overnight discounts and promotions. So I would not be surprised if making an earlier booking or running a more comprehensive search turns up cheaper options.

But my point is this: Saving money is clearly important in today's context, and watching or reining in our spending during Chinese New Year - a period where most people inevitably tend to spend more - can help.

And not going on that Chinese New Year holiday and running the risk of paying for inflated tickets or hotel room rates is definitely one way to do that.

It looks like I am not the only one who thinks saving money should be the way to go.

A recent survey by United Overseas Bank (UOB) found that Singaporeans are tightening their belts this Chinese New Year. The 500 people polled, aged between 18 and 55, said they intend to spend an average of $2,503 each, down 11 per cent from last year's budget of $2,805.

For UOB economist Francis Tan, the findings did not come as a surprise, given last year's lower wage growth and expectations of slower economic expansion in the next 12 months. About 80 per cent of the survey respondents also said they expect the economic situation this year to be the same as or worse than last year's.

The road ahead for this year does look cloudy. Various international bodies, financial organisations and market analysts have said the global economic outlook for this year could be stormier than the last, while others are optimistic that the clouds will clear for a ray of sunshine, or two.

The mixed opinions, if anything, only reinforce the fact that uncertainty is clearly at play. This comes amid the rise of anti-establishment sentiment that resulted in a series of stunning global events last year, such as Brexit and the election of Mr Donald Trump as president of the United States.

I hardly ever make new year resolutions, but this year I am quite determined, for instance, to swop the cab rides for bus or train rides, unless absolutely necessary. Small savings can go a long way, I believe. It is really also about knowing that I can create the discipline I need to keep the money I earn.

Let us not forget there is still the aftermath to deal with - a whole host of unknowns.

At home, news of lacklustre economic growth, shrinking corporate profits, restructuring, retrenchment and unemployment has hogged the headlines. I do not doubt that Singapore still maintains an edge over many other economies or its competitors and will continue to do so, but those are still issues we have to contend with, for now.

OCBC Bank senior investment strategist Vasu Menon believes that savings are crucial for young people in particular, given that the uncertain economic climate means that "the job security and the current pay packages they earn are not a surety".

"Young people usually have aspirations like taking holidays, getting married, owning their own home when they get married, and even investing to grow their wealth," Mr Menon noted.

"Each of these aspirations requires funds which are derived from savings. It is imperative for young people to save to help make their dreams come true."

So what is Mr Menon's advice for young people on what to do with their hongbao stash this year?

Invest it, he said.

"If possible, a young working person's hongbao collection, which is over and above his savings from earned income, should be invested for better returns," he noted. "For a young person, youth and time are the biggest advantages he has, which he should capitalise on to grow his wealth."

Investing is a "must", of course, as espoused by almost every financial expert I have spoken with. But what are the options today?

Gold, known as a safe haven asset, has made a comeback in recent weeks, climbing nearly 5 per cent since the start of the year to around US$1,204 per ounce on Friday, despite having fallen steeply following the US presidential election on Nov 8 last year.

"The January rebound in gold prices aligns with our bullish forecast for the year as a whole," said research firm BMI Research in a report, adding that it expects "a high degree of global economic policy uncertainty to bolster the attractiveness of holding safe haven assets such as gold".

But there are risks to this view (to be saved for another story, another day), and in an environment where quality investments are limited, there may be nowhere for young investors to hide.

Cash may well be king.

After all, keeping aside some cash provides a safety buffer, especially in times of heightened volatility. No one wants to be forced into selling stocks in a down market when he needs cash, or be unable to fork out the funds for a big-ticket item he cannot do without.

For me, at least, I am making extra effort to watch where my money goes.

I hardly ever make new year resolutions, but this year I am quite determined, for instance, to swop the cab rides for bus or train rides, unless absolutely necessary. Small savings can go a long way, I believe. It is really also about knowing that I can create the discipline I need to keep the money I earn.

That is not to say I will be cutting all other "miscellaneous" expenses. Taking vacations will still be high on my to-do list, but the key here is to stretch every dollar to its maximum. Think discounts, promotions and sales. Each purchase will still need to be well thought out, of course.

Earlier this month, budget airline Jetstar Asia launched a campaign on social media urging Singaporeans to stay home with their families this Chinese New Year, and said it will waive all change fees and fare differences to move flight departures on both Jan 27 and 28.

Ten brownie points to Jetstar. I thought it was an impressive marketing move in the spirit of Chinese New Year (and no, this is not a corporate spiel), which also gave travellers a second chance at saving some money, presuming they changed their flights to cheaper options. Because why not?

So here is to a year of amassing cents and sensibility. And hopefully we will all get by.

A version of this article appeared in the print edition of The Sunday Times on January 22, 2017, with the headline 'It pays to watch your spending this CNY season'. Print Edition | Subscribe