Face is a core element in Singapore’s culture. It is a highly valued commodity in our society. If a person has face, he or she has dignity, reputation and honor.
Having or losing face during CNY
Singaporeans are particularly sensitive to retaining face in all aspects of our lives.
We treat somebody well because we want to give face. In return, we can earn face and be respected. In contrast, we lose face when we feel inferior or treated unfairly. Then someone has to say or do something for the purpose of face-saving.
For example, every year before Chinese New Year is the busiest time for home renovation business. Because we cannot afford to lose face by letting visitors see our rundown house. Likewise, prices of COEs always go up before Chinese New Year. What a good opportunity to show off a brand new car in front of families, relatives and friends.
There is a joke about visiting the extended family during Chinse New Year. For the wife to have face, the husband doesn’t have to do exceptionally well. He only needs to be a bit better than his sister-in-law’s husband. That is the magic of comparison.
In Singapore local movies, there are often scenes with guys pretending to be somebody that they are not – with more wealth, better titles or higher social status. But it makes them feel good because they have more face now.
Rolex watch = Having face?
Last week, Moneywise published the article “Who in the hell needs a Rolex watch?”. Read what Charlie Munger, the late Vice Chairman of Berkshire Hathaway, warned us about pretentious purchase.
“If you’ve ever looked at your neighbor’s shiny new car and uttered curses at their good fortune, you’re not alone.
In fact, this feeling of resentment about other people’s financial standing is what makes the world go around. The world is not driven by greed. It’s driven by envy,
People too often take what they have for granted and they fixate on how seemingly unfair it is that other people have more than they do — whether that is more money, more tangible assets or even more friends.
I have conquered envy in my own life. I don’t envy anybody. I don’t give a damn what somebody else has. But other people are driven crazy by it.
Who in the hell needs a real Rolex watch, so you can get mugged for it?
My advice to young people is: don’t go there. The hell with the pretentious expenditure. I don’t think there’s much happiness in it.”
Before I became a brisk walker after injuries, I was a runner. I wore a sports tracker watch to work after my morning run. Nine years ago, my husband gave me a Rolex watch. He said a department head should wear a proper watch. I said it doesn’t matter because most of my team are based in countries outside Singapore. No one would notice it anyway.
I still wore the Rolex watch today. It was not a “pretentious expenditure” but more a grateful gesture. Nonetheless, I didn’t think anyone has ever given me face or made me lose it because of my watch.
The real reason behind home upgrade
Over the years, the Singapore dream has evolved from owning an HDB flat to upgrading to a private home. The agents call it asset progression.
Their philosophy is: If others can afford it, I can afford it too. When I can keep up with the Joneses, I will have face among my peers.
During my one-to-one property consultation sessions, I often ask my clients why they want to upgrade from HDB housing to condo living.
The common answer looks like this: Our BTO flat has reached its 5-year MOP. If we sell it now, we can lock in the profit of a few hundred thousand dollars. We want a better living for the family …
My questions are: Did you enjoy staying in your current home the last 5 years? What is the “profit” or leftover after refunding the bank loan and your CPF withdrawal? Why are you buying a condo unit smaller in size than your HDB flat? When do you expect to pay off the bigger new housing loan with higher interest rates?
If you can afford to pay in full, by all means.
“In a booming market, assuming that you manage to sell your home at a good price, you may still end up spending all the profit on your next home that is most likely bought at a high price in a seller’s market. Worse still, while waiting to buy your next home, prices are climbing so fast that the profit from your old home may prove to be insufficient to buy the next one.
If you don’t want to ‘sell high, buy high’, unless you are willing to downgrade, it is naïve to believe that you can profit from the value appreciation of your home.”
– “It’s not easy to profit from your home”, PropertySoul.com
House-rich cash-poor vs house-poor cash-rich
An important fact: The richer a person, the smaller the value of his home as a percentage of his total wealth. In other words, the poorer a person, the more of his money is stuck in his home.
Many Singaporeans are house-rich, cash-poor. The bulk of their wealth is in their home. They do not have much cash or liquid assets for spending, saving, investing and retirement.
“Our net worth is calculated as total assets minus total liabilities, minus the home we are staying in. Our home is not an asset because we are not generating any income from it. Furthermore, it is a liability if we still have an outstanding loan with the bank.
As long as you stay in the flat, even if its value goes up, it has nothing to do with you because you and your family have no other place to stay if you sell it tomorrow.”
For the cash-poor, their primary wealth is their primary residence. If the home has a loan, it is a depreciating liability and a big expense. For the cash-poor, housing cost is a big expense item in their monthly budget.
For the cash-rich, the bulk of their wealth goes to generate different streams of income. They can be profit from businesses or return from investments. Whether they own their residence or not, housing cost is negligible in their total expenses.
As the saying goes, owning your own home doesn’t make you rich. Owning somebody else’s does.
To be house-poor cash-rich like the wealthy, keep your home value low as a percentage of your total wealth. Instead of paying installments to the bank, put your cash in contingency funds, good investments and charities that need help.
Food for thought
“Many people believe that they are compelled to work hard to keep pace with the city’s high living standards. Such is the life of the middle class. But who set that “standard” of living in Singapore? Is owning a 4-room or 5-room flat the “standard”? Are the “middle class” in Singapore staying in HDB flats, condominiums or landed houses?
You may be comfortable staying in a 4-room flat. But your colleague has already upgraded to a condominium, and your boss is staying in a landed property. You invite your college friends for a housewarming in your new cluster house, only to find that one of them just bought a bungalow.”
It is naïve to think that a nice home or a nice address can give us face.
Because in reality, only the poor care about face. What the rich think is always benefit.
That is why the poor are generous in spending while the rich look stingy with their fat purse. The latter don’t need that abstract face that they most likely already have. Only if they see there is value-for-money or real benefit to them, they won’t easily part with their money.
So don’t complain about inflation. Don’t blame high interest rates. Stop lamenting about not having enough money. Money never go back on us. Unless we are bad with money.
Check out my new online courses How To Buy Good Quality Properties and Buy The Right Condos.
You can watch the recording of the presentations at the 2023 Mid-Year Singapore Property Review and Outlook seminar.
The video 2023 Singapore Private Home Market is available for viewing here.
If you need advice on property matters or residential properties in Singapore, you can check out my one-to-one consultation service.
My book Behind The Scenes of The Property Market is available for preview and order online.
Such a polemic topic. As saying goes; much as tree need skin/bark, human need face.
It is ironic but with social media, this phenomenon is getting more complex / complicated. However as human, nothing will change such mentality until it hits their pocket or say / utter (envy) comments until their objective of “putting down” their target duly achieved.
Yes our technologues will change. But human weaknesses from our ancestors remain the same.
thanks for the article, always enjoy reading them. you are pragmatic n see material life clearly.
Thanks for following my blog. I am glad that you enjoy reading the posts.
A huge mortgage is an important life decision. That is why most people can’t get out of the treadmill, because vanity and envy is, admittedly, so hard to overcome, so much so that most got the sequence wrong – they spend and use credit first, then build wealth later (or never).
Ironically, once one successfully built a sustainable wealth, “face” is likely not THAT important anymore. By then, if it makes oneself happy, sure, I advocate spending, .
“House (residence) rich, cash poor” is just a polite way of saying someone is financially illiterate, and likely in debt.
Can’t agree with you more. It’s only when you are debt-free that you really start building wealth. One day you realize that you have attained financial freedom. You can afford to buy all those things you want. But somehow, you are not very keen to buy them anymore. Then you begin buying experiences and anything that can make your loved ones happy.