When budgeting goes wrong

THIS month and the next, I need to figure out how to spend $80 worth of NS45 Safra vouchers - a one-off hongbao given out early last year to thank all national servicemen for their contribution to defence. They expire on March 31. The next month may very well see consumer spending across the island tick up as others like me, who have procrastinated spending the vouchers till the last moment, rush to cash in.

I will probably end up spending them at NTUC to buy some necessities like shampoo, washing powder or vegetables and fruit. But I am also tempted to use the vouchers to eat out at a restaurant - something I don't usually do because I find it too expensive. But by having a fixed amount to spend, I am encouraged to do so regardless of the value I perceive from the meal.

When we speak about budgeting, we usually talk about setting a fixed amount to spend every day, week or month. But sometimes, knowing this amount can have perverse consequences. Instead of spending only when they need to, people willingly spend to their self-set limits, spending more than they otherwise would.