Why the Exchange Rate Makes You Overspend
You are not buying goods. You are buying the feeling of being a smart shopper.
Why the Exchange Rate Makes You Overspend
You crossed the Causeway last weekend with a plan. Save money. You had been careful all week. Smaller portions. No takeouts. Public transport only.
Johor Bahru meant cheaper groceries. A quick lunch. Maybe a massage. You came back with a suitcase and clothes you did not need.
It was only RM180.
Or so you thought.
That phrase does more damage than almost any financial mistake I see. “It was only.” Only RM200. Only 70% cheaper. I could save so much money. It is only a small detour to that other mall.
The exchange rate is not a discount. It is a story you tell yourself about why this purchase is different.
The Anchor You Do Not See
When you walk into a JB mall, your brain does something automatic. It compares every price to Singapore.
Laksa for RM15. Your brain says: “Wow. That is S$4.50. In Singapore, it is S$8. I am saving 45%.”
Massage for RM150. Your brain says: “That is S$45. In Singapore, it costs S$100. I am saving 55%.”
This comparison feels rational. It feels like smart shopping. You maximised your spending capacity. But there is a problem.
You are anchored to the wrong reference point.
The question is not “Is this cheaper than Singapore?” The question is “Would I buy this at all?”
That jacket for RM250 feels like a steal because it would cost S$200 in Orchard. But you were not shopping for a jacket. You did not need a jacket. You saw a discount and bought a discount.
Your brain latches onto the first number it sees and makes all judgments relative to that anchor. In JB, the anchor is always the Singapore price.
The exchange rate turns every price tag into a comparison. And comparisons make you spend.
The Mental Bucket Problem
There is a second pattern at work.
Your brain keeps money in separate buckets. The housing mortgage is serious money. Savings is serious money. But “JB money” goes in a different bucket. Holiday money. Fun money. Money that does not really count.
When the exchange rate was at 3.40, you could change S$500 into RM1,700 before crossing. Suddenly you feel rich. The stack of ringgit feels like play money. It feels like you have more money. You spend it more freely because it came from the “JB trip” bucket, not the “real life” bucket.
The same S$500 in Singapore dollars feels like a lot of money.
This is why you budget S$200 for the trip and come back having spent S$400. The ringgit did not feel like real spending. It felt like a separate game with separate rules.
But when you convert back, the money is gone. Same money. Same bank account. The buckets were an illusion you created.
My MBA research on 203 Singaporean investors found that 43% evaluate each investment separately instead of looking at their total portfolio. The same pattern applies to spending. When you separate JB money from Singapore money, you lose sight of the whole picture.
The Real Cost of Cheap
Here is what the exchange rate hides.
You drove an hour. You paid for petrol. You paid for parking. You spent four hours shopping instead of doing something else. That is time and money.
Time not resting. Not exercising. Not reading. Not preparing for the week ahead. You might have been better off not taking that trip.
Take my friend Wilson, for example. He used to go into Johor Bahru every weekend to pump petrol. He thought the savings were worth it. But when he started teaching part-time on top of his full-time job, his time cost became real to him. After factoring in traffic, the savings shrank. He stopped going regularly.
Then you bought things you did not plan to buy. Not because you needed them. Because they were cheaper than the Singapore version of something you also did not need.
The savings are only real if you were going to buy the item anyway.
If you went to JB specifically for groceries you buy every week, and that was all you bought, you saved money. But that does not count your time. If you came back with a new suitcase because it was “only RM180,” you did not save anything. You spent RM180 you were not going to spend.
These trips and unplanned purchases add up over time.
The Proof Is in the Empty Malls
Johor business owners are reporting a 30-40% drop in Singaporean shoppers this year-end. Some describe it as the weakest crowds since the pandemic when the borders were closed.
The reason? The ringgit strengthened. It moved from RM3.30 to RM3.19 against the Singapore dollar.
Think about what this means. The groceries are still there. The massages are still there. The malls have not changed. Only the exchange rate moved.
And suddenly, the trips are not worth it anymore.
This tells you everything about what was driving those trips in the first place. It was never about the goods. It was about the gap. The feeling of getting more for less.
When the gap shrinks, the spell breaks. You realise you were not shopping. You were chasing a feeling.
A Framework for Your Next Trip
Before you cross for a short weekend shopping trip, prepare the following first.
Start with a ringgit budget. Not a vague “I will be careful and not overspend.” A specific number. Write it down. Seeing the number on paper makes it real.
Make a list. Only buy what is on the list. If something is not on the list, you do not buy it. No exceptions for “incredible deals.”
Ask one question before every unplanned purchase: “Would I buy this in Singapore at any price?” If the answer is no, the JB price does not matter.
After three trips, track your actual spending against your planned spending. See the gap. The pattern will be obvious.
The goal is not to stop going to JB. The goal is to stop letting the exchange rate make your decisions for you.
What You Are Actually Buying
The exchange rate feels like free money. It is not. Your brain sees discounts everywhere.
But your bank account does not care about exchange rates. It only sees money leaving.
Here is the thing about JB trips. You are not buying goods. You are buying the feeling of being a smart shopper. The thrill of the deal. The story you will tell your friends about the incredible price you paid.
That feeling has a cost. It shows up when you unpack the car and realise half of it was unplanned. You will need to find space for all the items you bought.
Next time you cross the Causeway, notice what your brain does. Notice the comparisons. Notice the mental buckets. Notice how “cheap” makes you reach for your wallet.
The pattern repeats beyond JB. Europe trips. Black Friday. Singles Day. Anytime a price feels like a deal compared to something else, your brain does the same thing. It anchors to the higher price and tells you that you are saving money.
You are not saving money if you were not going to spend it.
The Right Question
Aware does not mean immune. But it slows you down. And sometimes, slowing down is enough to ask the right question.
Not “how much am I saving?” but “was I going to spend this at all?”
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Please consult a qualified professional before making investment decisions.