As the world economy inches closer into recession, we can reassess our expenses and align them towards our priorities and needs. This will help us safeguard against rising costs and plan for a secure future in the times ahead.

Singaporeans have had higher discretionary spending amidst stagnant income gains in recent years. The most significant factors are inflation and pent-up spending from the reopening of borders and easing of Covid-19 measures. People spent the most on transport (60.2%), entertainment and travel (56.7%) and food (38.7%) over the past year.

We are on the cusp of a global recession, and though Singapore might be able to evade it, being globalised means we may still feel the impact and need to tighten our belts.

Working Against Things Outside Our Control

To make sure you’re ready for the gloomy climate ahead, it might be time to review your investment portfolios or adequacy of your insurance coverage. You can also adjust in small ways, like reducing your everyday expenses. For instance, instead of having brunch every weekend, you could have one every other week. Better yet, host a brunch at your home!

Understand Your Limits, Then Get Creative

Travel expenditure is typically a major expense, and we encourage you to get creative with how you can spend less in this area. While you might consider cutting down on the number of trips you make a year or where you travel to, you could also think about unconventional travel options like farm stays or house-sitting.

It definitely doesn’t mean you can’t have good things, but perhaps also consider what you can’t live without. Do you need a gym membership at a high-end club, or are you going to be equally happy at one with no frills?

Try to approach this as an exercise in observing what you spend on more closely, rather than one aimed to just restrict your expenses. You might also be in the midst of paying off housing loans or planning on upgrading your house. These could be non-negotiable expenses that will need to be your primary consideration.

A Fund For Every Purpose

Working on and taking care of yourself is still a priority; try not to scrimp on essentials like therapy, etc. and set aside funds for various kinds of rainy days. Age-related health problems are more likely to creep up in our 30s, so it would be helpful to have contingency funds in place for these purposes.

It might be more helpful to get specific about each saving fund’s purpose; emergency funds, creature comfort funds, etc., or funds that can be used to reduce the amount of debt you currently have. These will ensure you don’t overstretch yourself in the event you find yourself needing more funds to tide through the recession.

Optimise, Don’t Overthink It

Right now, the recession is still only a possibility – so it’s as good a time as any to practice optimising your spending. Alongside this, reviewing your investment portfolio and adjusting them for the times ahead will increase your likelihood of being in good stead for the coming years.