The weakening Singapore dollar has a direct impact on your wallet. Here are 4 ways you can save money despite this.
At some point, you will face the possibility of losing money due to currency depreciation. Even if you don’t exchange money, you will be affected as the cost of goods and loan interest rates will change. Before we explore ways you can still save money, it helps to understand how you will be affected by the weakening dollar.
How Are You Affected When the Singapore Dollar Weakens?
When the Singapore dollar (SGD) weakens significantly against the US dollar (USD), there is a direct impact on your wallet. Some of the things that will affect you will be:
1. More Expensive Online Shopping
Websites that price items in US dollars, such as Amazon, ThisiswhyI’mbroke, Etsy, etc. will become more expensive for you. While the prices on the products may not have changed, the weaker SGD means you will have to spend more to buy.
If the SGD weakens by 8% for example, that’s almost as if everything on these websites has gone up in price by 8%.
2. Rising Cost of Goods
Businesses will have to pay more for goods imported from the United States. Some businesses may absorb these costs, but others might pass the costs to you. For example, meat and fruits imported from the US often cost more in supermarkets when the SGD is weak (which can also mean it’s more expensive to dine out).
3. Added Costs if Your Children are Studying Abroad
If you or your dependents are studying in the United States, a weakening SGD can mean substantially higher tuition fees. Rent, medical costs, and purchasing power (you may need to raise their allowance to compensate) are all adversely affected.
4. Rising Travel Costs
Travelling to America will definitely be more expensive. However, travel prices can sometimes rise even if you are not headed there. This is because jet fuel is priced in USD, so if the strength of the USD rises sharply the price of air travel can be affected. This also impacts shipment costs, which means courier companies may raise prices.
5. Potentially More Expensive Loans
Banks may raise interest rates on loans in order to make up any losses from currency depreciation. This means the next round of loan packages offered by the bank may have a much higher interest rate than the present. This is why loan prices shift constantly, and it’s important to always compare them.
How to Save Money with a Weaker Singapore Dollar
You can’t affect the strength of the currency, but you can take steps to protect yourself. The easiest methods would be to:
1. Contact a Forex Broker
A Forex broker can help you to get the best possible currency rates. If you are constantly changing money (e.g. you study in America), Forex brokers can save you thousands of dollars a year.
2. Travel Smart
Whenever possible, avoid trips to countries when their currency is especially strong. You can also use currency fluctuations to your advantage: at this point in time (October 2015), a trip to Australia will save you money, as the Australian dollar (AUD) is at its weakest point in six years.
3. Make Payments Earlier
If you or your dependents are studying abroad, and the SGD is weakening, you can save by making advance payments. However, you should consult a forex broker or financial advisor first – do not try to time the currency fluctuations yourself.
4. Compare Your Loan Rates
Sharp currency fluctuations almost always cause loan rates to change across the board. This is as true for home loans as it is for business and personal loans. Formerly cheap loan packages can become prohibitively expensive almost overnight, and you might have to seek alternatives.
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