Many Singaporeans these days have the luxury of travelling overseas often. Sometimes, it’s for work related reasons. On other occasions, it could be for a holiday.
We need to spend when we are overseas. But have you ever sensed that you tend to spend more money while overseas, compared to being in Singapore? This is in spite of the fact that Singapore is already one of the most expensive cities in the world to live in.
Being Less Cost-Conscious Overseas
We tend to be less cost conscious whenever we are overseas. If we are on holiday, we might rationalise to ourselves that spending more is okay, since the point of going on a holiday is to enjoy a well-deserved break.
We might also spend more because of what we see as “limited opportunity” to purchase items that are cheaper overseas, or cannot be found in Singapore.
For example, when we go to Korea, we might spend hundreds of dollars on facial and cosmetic products, not because we really need that many products for ourselves, but because they are cheaper.
Read Also: Why Are Masks In Korea So Much Cheaper?
Likewise, when we go to Italy, there might be a tendency to buy Prada bags or Armani jackets just because you see the collections that cannot be found in Singapore.
We buy these things not because we really needed them (if we really did, we would have already bought them in Singapore), but because we think we are getting a great deal, compared to what we are used to in our home country. In the end, we end up spending more than what we would normally do.
But that’s not the only reason why we spend more.
Being Unfamiliar With Foreign Currency
S$10, S$50 and S$200 are amounts that we are familiar with in Singapore. We can relate to the value of these amounts almost immediately.
S$10 is enough for lunch and dinner for a day. $50 is enough for a nice dinner at a restaurant for two. $200 is enough for one month worth of groceries.
What about ¥750, ¥3740, ¥15000? How much value do they get you in Japan? Or ₩8200, ₩41,000, ₩164,000? What can they get you in Korea? Even though these are the equivalents of S$10, S$50 and S$200, we are not as sharp when dealing with foreign currencies as we are with the local Singapore Dollar.
Complexity Of Conversion
The hassle of conversion, coupled with our poor mathematics skills, makes it difficult to constantly assess the money we are spending (in foreign currency) against the value we receive.
Spending €18 on a plate of pasta in Italy seems okay until we realize we paid S$27 for it. We might balk at paying S$50 for a cab ride in Singapore, but £28 somehow sounds reasonable when travelling in London.
The degree of difficulty for currency conversion also plays a part. Currencies such as the Japanese Yen (1SGD to 75 Yen) and the Korean Won (1 SGD to 820 Won) are difficult to convert without the assistance of a calculator. That leads to us spending more than we normally would since we are unable to assess quickly how much we are spending in Singapore Dollars, which is how our mind would normally function.
How Online Games Make You Spend More
If you do not believe difficult currency conversion plays a part in encouraging people to spend more, here is an illustration from online games.
Many “free” online games charge players by getting them to pay for add-ons in the game. This can be in the form of special items, characters or even something as simple as giving you more “lives” so that you can continue playing without having to wait or restarting the level altogether.
For many of these games, there is usually an in-game currency in play. You need to first buy the in-game currency, and then use the currency to buy items in the game.
If you are alert enough, you would notice how much this in-game currency costs in terms of real money.
League Of Legend
If you were bad in math, trying to calculate how much each “Riot Points” in the game costs you in real money would be a pain.
The math has been deliberately made complex so that players in the game need a calculator to find out how much real money they are paying for each item they buy using “Riot Points” in the game.
Game developers know that when you make the math complex, people are less likely to be able to determine just how much they are paying for virtual items with real money.
Getting Rid Of Excess Cash
Last but not least, some of us may prefer using up all our foreign currency, rather than bringing it back to Singapore. This is the reason why International Airports all around the world are always filled with shops selling useless souvenirs that we think no one would ever buy – to help you get rid of the foreign currency that you do not want to return home with.
One way of reducing excess cash that would be to bring with you a good travel credit card. A good travel credit card is one that gives you good discounts or Airmiles when you spend overseas. The Citi PremierMiles Visa Card, which you can apply for using the SingSaver credit card widget on our website, would be a good credit card to consider using when you are overseas.
DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.