The cost of convenience: How to identify and avoid overspending habits

I remember like it was yesterday when ride-hailing first came to Singapore in 2013. Back then, GrabTaxi, as it was called, was competing with Uber for market share. Both ride hailing services offered customers discount codes to let them try out their services. 

In 2013, working as a financial planner, I frequently had to meet clients at different parts of the island. The ride-hailing service was a real time-saver and allowed me to meet more clients in a single day. 

I can’t tell you how convenient it is to be able to order a ride straight from your smartphone and have it come to pick you up in a matter of minutes. That’s because you’re probably already so used to it that you can no longer imagine a world that is different. 

Back then, it was a game changer. I continued using the service even after the discount codes ran out. Whenever I had to go somewhere, I found myself automatically hailing a ride on the app instead of taking the bus or train. I even used it when I wasn’t meeting clients.

The shock came when I did my monthly expenses tracking and found, to my horror, that I was spending $200 per month on ride-hailing services, which is much higher than the usual budget of $120 I usually spend on transport. A difference of $80 a month may seem small, but over the course of a year, it adds up to almost $1,000, which could be channelled to other needs.

Prioritising needs vs. wants: Making conscious spending choices

I resolved to cut back on using the ride-hailing app so freely, using it only when I was pressed for time. The problem was, that I had become used to a lifestyle of convenience. Initially, it was painful for me to choose to take the train home, instead of hailing a ride at the end of a tiring day. But I persevered and eventually weaned myself off this lifestyle of convenience. I also gained some interesting insights from the experience. 

For one, I came to understand the ride-hailing business’ strategy of getting users hooked to the lifestyle of convenience by offering low prices for their service initially. This was so that, after they achieved the desired market share and pushed out the competition (Uber exited the market in 2015), the ride-hailing app could increase their prices and users could not do anything about it because they were already hooked to the convenience of the service. Yes, they would complain for a while, but the majority would still continue to use the service because they didn’t have a choice.

Naturally, this came in hindsight, but it was an interesting insight into how businesses trap consumers into lifestyles of convenience, and what it means for you and me. 

Lifestyle inflation

In the world of personal finance, there is a phenomenon known as ‘lifestyle inflation’. Do you remember when you first started working and earned an entry-level salary? Your meals would likely have been simple fare. As your income increased over the years, you probably decided that you could treat yourself to more elaborate meals from time to time.

You started eating in cafes and restaurants more often because you could afford it, because you deserved it because all your friends were doing it, or whatever reason you gave yourself. Over time, your spending patterns changed. You gradually made more expensive spending choices. This became your way of life, and if you are now asked to give it up and go back to eating simple fare, you would find it very hard, even painful, to do so.

This is lifestyle inflation when your spending rises as your income rises. Your wants have become your needs, and you now find it very hard to live without them. For many of us here in Singapore, ride-hailing, once a want, has become a need. We find it very hard to live without it. 

Before the Covid-19 pandemic, food delivery services were a want. During the pandemic, it became a necessity for many who did not cook at home and who could not leave home to buy food. By the time the pandemic ended, using food delivery services had become the norm. It has become part of our lifestyle. 

It’s not just food delivery services that have become part of our spending habits. The rise of convenient online shopping means that we no longer need to leave our homes for money to leave our bank accounts. Impulse buying has become the norm, with advertisements of monthly sales being pushed to us whenever we use social media. It is not an exaggeration to say that there are multiple sales going on every month on online shopping platforms.

And we wonder why we are overspending, why the cost of living is going up, and why we seem to be struggling even as our incomes are rising. It feels like our income is just not rising fast enough to match our spending.

Why Singapore is the most expensive city to live in

Singapore is internationally renowned for being an efficient city full of modern conveniences. It also regularly tops international lists as being the most expensive city to live in. This is not a correlation. There is an actual causative link between the two observations. The link is that there is a price to pay for convenience.

During a part-time stint working in a minimart, I came to an important realisation. Many businesses sell convenience at a premium. For example, a 1kg sack of rice costs $4 at this minimart. You would assume that a 25kg sack of rice would cost 25 times that amount, that is, $100. Instead, it costs just $45. But who wants to deal with 25kg of rice when you just need 1kg at a time, right?

This is what the minimart does to make money. It buys 25kg sacks of rice and repacks them into 1kg sacks and sells them to customers who don’t know any better. In exchange for selling them convenience, the business earns the difference. You’re not buying just that 1kg sack of rice for $4; you’re buying the convenience that comes with it.

This is the easiest way for businesses to make money – buy something in bulk, repackage it into more convenient amounts, and resell it to customers for a premium. Telcos do this with bandwidth. Web hosting companies do this with online space. Supermarkets do this with food. You could do it too. You can buy a carton of 24 bottles of water for $5, and resell it to thirsty customers for 50 cents apiece, earning you $12. 

Convenience has a price. You may think that it saves you time, but ask yourself, with all the conveniences you have in your life today, do you really feel like you have more free time? The fact of the matter is that to buy convenience, you pay not just in money, but also in time. Here’s how it works:

Because we have less free time, we buy conveniences, thinking that it saves us time. In order to pay for these conveniences, we need more money, so we work longer hours. Because we work longer hours, we have less free time. And because we have less free time, we buy conveniences, thinking that it saves us time. 

It doesn’t. 

This is the vicious cycle of convenience. Over multiple cycles of convenience, we progressively have less and less free time as we buy more and more conveniences. This is the real cost of convenience. In order to buy some free time to use now, we steal the free time from our future selves. 

The reason why we do not think about this is because we are too busy. There’s too much on our minds, and we don’t have the mental space and free time to think about how we have trapped ourselves in this vicious cycle. To support our lifestyle, we have taken on more work that we would like to have. We are all stressed out, trying to pack as much as we can into the little free time we have. 

So, because we have little free time, we spend on conveniences which we think saves us time. It does, so long as we don’t get hooked on the lifestyle. The moment our little conveniences become part of our lifestyle, they no longer save us time. In fact, they consume our time and demand more of it, because we are then forced to work harder and longer just so that we can have these conveniences… which we wouldn’t need in the first place if we had more free time.

According to a saying attributed to Einstein, “Insanity is doing the same thing over and over again and expecting different results.” It’s insane for us to keep expecting to have more free time for ourselves by paying for more and more conveniences, when that is the very thing that is causing us to have less free time.

Engaging in mindful spending: cultivating conscious consumption

The good news is, there is a way out of this vicious cycle. Only one part of this cycle is completely within our control, and that is the part where we choose to buy conveniences. The way out is through conscious consumption. Through better money management, you start to pay more attention to finding the answers to the question, “Where does your money go?” 

It goes to the conveniences that you can start weaning yourself off one by one. Because you stop buying conveniences, you don’t need more money. Because you don’t need more money, you work shorter hours. Because you work shorter hours, you have more free time. And since you have more free time, you don’t need to buy conveniences. It’s a positively reinforcing cycle that gains you more and more free time as you buy fewer and fewer conveniences.

Granted it is painful when you first start doing this because it is difficult to change a lifestyle that you have gotten so used to. But keep working at it, because it’s worth it. As you go through the cycles, you will find that you have been spending money on things that you didn’t even know were conveniences, because you have gotten so used to it being part of your lifestyle. 

As you eliminate these conveniences from your lifestyle, realising that they are luxuries you need less than you need free time, you will find yourself having more and more free time. You might even arrive at a point when you realise that, actually, you don’t even need to work for money anymore, because you have enough to live on for the rest of your life. 

I did. I calculated that if I invested the bulk of my savings to make my money work harder, and put the rest into a savings account with a higher interest rate than what my bank usually offered, I would have enough to last me till age 95 even if I retired at age 40. That is 20 years earlier than what I originally planned.

As it turned out, the little things do matter. It is only thanks to ride-hailing apps that I realised that I didn’t want to spend my life working for money to pay for conveniences that I could do without. 

I no longer use ride-hailing apps in Singapore. Neither do I use many of the modern conveniences that my peers use. I may not live as convenient a lifestyle as others do, but I do have the option of not having to work for money if I don’t feel like it. Now that is a real time-saver!

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We’re grateful to Daniel Tay for sharing his personal story of financial change. His insights into overcoming overspending and managing lifestyle inflation are truly valuable. Thank you, Daniel, for your willingness to inspire and educate others through your journey. 

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