Gosh! The inflation rate in Singapore is the highest it has been for 10 years. We need to go all the way back to 2012 to experience a rate of inflation as high as 5.4%. But remember that this is an average inflation rate. For some families in Singapore, their personal inflation rate could be lower. For others it could be a whole lot higher.
For those of us who are feeling the pinch from higher prices, it could mean having to spend beyond our means in order to maintain our lifestyles. That, in turn, could mean drawing down on savings or, perhaps, taking on debt in order to make ends meet.
A better idea could be to cut back on the things we spend our money on. Question is what do we cut and what should we leave in?
It is possible that long-term savings could be some of the first to be cut. That is understandable. After all, putting food on the table today is more important than a feast in our old age. And long-term savings is one of the easiest to axe.
But every $100 that we leave out of our retirement nest egg now could mean $200 less in 10 years’ time; $370 less in 20 years’ time, and $700 less in three decades’ time. This is money that will be hard to replace when we enter our twilight years.
So, before pressing the pause button on our long-term savings, we should think carefully about where else we can make cuts to our budget. It won’t be easy because it is never easy to take away the things that we have been accustomed to.
However, it is important to prioritise. And for every one of us, our priorities will be different.
Think long and hard before putting long-term savings at the bottom of the priorities list. The decisions that we make today could have a serious impact on what happens decades from now. Remember we are not alone in having to make tough choices in the face of rising inflation.
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