Singapore's rich: Big spenders, not big gamblers

Singapore's rich: Big spenders, not big gamblers

Much has been said on how to get rich; be it saving hard, spending carefully and investing wisely, building relationships with the right people and entrepreneurship.

We can read about how investing legends and corporate titans made their millions and billions. But just as interesting is how they spend their money. What do the rich spend it on?

Are they spending on these items because they can well afford to? Or does spending the way they do somehow perpetuate their wealth?

Today, using data from Singapore's latest household expenditure survey, we can answer the first question.

Some things are not so surprising. The rich spend on and live in more expensive homes. Half of households living in landed properties earn $20,000 and more a month.

The rich spend a lot more on what economists call discretionary goods and services. These are things that people spend on because they can afford to, not because they need to.

These include nice-to-have but non-essential items like restaurant meals, wine, fancy clothing, package tours, pets, hotels and higher-end cars.

They also spend a lot on services that arguably enable them to retain their wealth and status: Private tuition and overseas education for their children - which give them more opportunities to succeed in school and in life - are particularly striking examples.

But the rich do not automatically spend more in every category.

Notably, there are two major items they avoid. These are tobacco and the coyly named "games of chance", which presumably includes gambling at casinos, lottery variations run by Singapore Pools, mahjong and card games. In short, the rich do not tend to smoke or gamble, compared to everyone else. They can very well afford to, but they don't.

Meanwhile, poorer households are spending more money on heavily taxed cigarettes, which are harmful to their health. They are also spending more on gambling activities which, statistically, result in them losing out in the long run.

THREE MEALS IN A HAWKER CENTRE, FOODCOURT OR RESTAURANT?

Before we get to casinos and cigarettes, let us examine the data on the most critical need of humans - food.

In Singapore, households across most income levels spend similar amounts of money on basic food items like bread, meat, fish, eggs, fruit and vegetables.

Most spend between $400 and $500 a month on these food items and non-alcoholic beverages combined. The third-poorest tenth of households, for example, spends just $50 less than the top tenth of households on these items every month.

Similarly, most households spend about $500 a month enjoying relatively cheap food at Singapore's ubiquitous hawker centres, foodcourts and coffee shops.

However, the data suggests that pricier restaurants, cafes and pubs are direct competitors to Singapore's hawker centres.

This means that as people earn more money, they tend to stop eating out cheaply. Spending on cheaper dining options drops sharply for households in the top third by income, replaced by restaurant dining expenditure.

The rich spend, on average, a few hundred dollars more a month on food than the rest.

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