The Lipstick Index (and what we can learn from it)

What does a lipstick have to say about the economy and our financial readiness to weather rising healthcare costs? The answer might surprise you. To get started, let’s take a look at The Lipstick Index.

First, a recap. During the recession in the early 2000s, consumers were hesitant to splurge on luxury and big-ticket items, but they didn’t stop spending entirely. In a surprising twist, the sales of cosmetics products went up. The theory goes that during a bad economy, people will indulge their need for luxuryon small but affordable purchases that make them feel good. Since then, a spike in cosmetics sales has been closely associated with a worsening economy¹.

What can we learn from this observation? As financial analysts brace for a higher likelihood of a recession in Singapore, the question on how to spend ourmoney (and what to spend it for) is becoming a hot topic.

Here’s our take: it’s fair to spend some of your hard-earned money on things that give you joy, whether it’s a new haircut, movie night, or weekend brunches. But while you’re chilling at your favourite café, spare a few minutes to ensure that you’ve got everything you need to protect what matters most: your health, your finances, and your loved ones. These tips can start you off in the right direction!