Fuzzy Absolutes and Percentages

I can relate to the BT article "Money, in the eye of the beholder" dated 29 August. The writer wrote about his encounter shopping at a high end supermarket in Bangkok where the prices were equivalent to that of Singapore or even higher for certain items. Though he could well afford it he was reluctant to make his purchases.

His statement "Spending becomes a game of percentages, not absolute numbers" hits home for me.

In my ex life working in the corporate I would occasionally go for a late lunch at the canteen. Many times I noticed the office cleaner eating a few tables away. The food we were eating was almost similar and it always struck me as something not quite right that both of us paid the same amount for it. It didn't make sense the cost was just a tiny fraction of my monthly pay but certainly would have eaten a chunk into her salary. I was thinking in terms of percentages.

Meanwhile when the stock market slides and my portfolio drops by thousands I moan. The thought of substantial shareholders of banks and large corporates suffering paper losses in hundreds of millions affords little comfort, probably because the absolutes for me means more than the absolutes for them. I tend to think beyond a certain level wealth may get fuzzy.

So our mind tends to dart from thinking in absolutes and percentages.

However when comes to spending many people think in terms of percentages which may not be a wise thing to do. So if a person earns 20K a month and thinks it proper to spend just a tenth on clothing; that's extravagant in my view. 2K a month is someone's salary. The article quoted a woman who earns $S250Ka year complaining abut having to pay more taxes arising from a change in tax relief. The writer however empathized with people whom he said have "no choices" but to think in percentages instead of absolutes. He quoted high income earners who have to throw lavish children birthday parties just to be in line with parties their children were invited to or are living too far from MRT stations or where no one in the neighbourhood  or office drives a Honda. These people just have to think in terms of percentages.

Being from poor background (or at least poor when we were small) both my husband and me tend to think in absolutes though his tendency is much worse than mine. So many times I try to influence him to think in percentage terms, for example crying in exasperation "the fruit punch is a tiny fraction of your income" when a frown gathers when I am ordering a drink at a restaurant, albeit overpriced. However I am not consistent too. So when he tipped each masseuse at Bintan S$5 for an hour massage, I declared he was crazy! I thought the amount was too much in percentage terms of their normal income but I didn't think of it  in terms of HIS.

The writer just wanted to warn people who develop the habit of spending in terms of percentages whilst being highly leveraged. As for myself I think both approaches can be used depending on  different occasions; it doesn't make sense to pay $6 for a bunch of mint at the supermarket when you can get it for S$2 in Tekka market for example.