4 Steps We Can Take Right now to Improve Our Financial Resilience (While not having to Earn A greater Salary)
As our country prepares to tackle her worst recession since independence, our capability to adjust to the changing economy is going to be important to overcome this difficult period. Even though many businesses in Singapore take cost-saving measures to prepare themselves against the recession, individually, we have to stay resilient to protect ourselves financially. In this article, we look at 4 steps that we can take right now to improve our financial resilience, without having to save money or needing to earn a higher salary.
#1 Manage Your Debt & Interest Costs
Debt is something that majority of us have. For example, we may took a housing loan to purchase the house and would need to make monthly home loan repayments.
Unlike discretionary spending like restaurant meals and overseas holidays, we are obliged to make our debt repayments every month even if our cash flow becomes tight. If we fail to make our repayments, we might incur additional interest costs.
If you find yourself financially stretched, there are a few stuff that that you can do immediately to handle your financial troubles.
Do not leave high-interest debt unpaid: Prioritise the repayment of high-interest debt first. Fundamental essentials loans which will add some highest interest costs to your debt when left unpaid, which makes it even tougher for you to definitely get out of a previously challenging situation.
Explore refinancing or make use of your CPF to settle your home mortgage: If you are taking a financial loan for the mortgage, you can consider refinancing if your loan is not within the lock-in period to take down interest cost. You can conserve cash during this time period by utilising your OA to pay for your house mortgage. This lets you use your cash to cover other debts that you simply also have.
Defer the loan repayments as a last option: Earlier this season, MAS announced some respite measures to help individuals who cannot deal with their existing debt obligations and insurance commitments. These measures cover 1) home mortgage repayments; 2) repayments on unsecured personal credit; 3) deferred premium payments for health and life insurance; and 4) flexible instalment plans for general insurance. Each of these loan deferment schemes their very own eligibility criteria so check it out when you are planning to defer your loan repayments. Do be aware that these relief measures aren't free, as interest price is deferred and also have to be repaid later by means of higher monthly repayments.
If you intend to find out more about how you can manage your financial troubles, there's a My Money webinar on 19 August 2021 that will discuss how Singaporeans can manage their money during COVID-19. Topics that'll be covered during this webinar include managing debt, financial planning during crisis and how banks are capable of helping their customers during this time period.
The webinar is free. You are able to sign up for this event here.
#2 Review Your Investment Portfolio
Due towards the economic impact of COVID-19 on many countries and industries, 2021 has been a volatile year for the markets.
For Singaporean investors (e.g. older investors) who prefer not to have a higher contact with the markets during this period, one method to continue earning risk-free return would be to top-up our CPF Special and Retirement Account. Both these accounts give us a return of at least 4.0% per annum. This is why for Singapore investors to carry on earning decent returns while not having to be worried about the volatility from the financial markets. Do note however that topping up your CPF account is definitely an irreversible decision.
If you wish to have greater liquidity, consider the Singapore Savings Bonds. The advantages of these bonds are that 1) you are able to redeem them at any month without penalty which 2) the value of the bonds don't fluctuate – which means you are always guaranteed your capital investment upon redemption or maturity of the bonds.
If you want to find out more about how you can allocate your assets and just what to anticipate for the rest of 2021, you will see a My Money webinar on 22 August 2021. Besides the discussion about stocks, bonds and ETFs, the webinar will also share about REITs, a well known asset class in Singapore, during this time period.
The webinar is free of charge and you can sign up here.
#3 Safekeep Your Money
Many people are enjoying the convenience of digital payments for a lot of our day-to-day spending, such as ordering food online, paying for things using our cell phone, or transferring money to the friends. However, together with great convenience and speed of those services, includes increased opportunities to be taken in by scams if we're not careful.
ScamAlert, an internet site by the National Crime Prevention Council (NCPC), identified e-commerce scams because the most common kind of scams with 2,467 cases reported from January to May 2021, causing a combined lack of over $3.2 million.
Besides e-commerce, phishing is another common scam. An example of this is where fake websites or emails are designed to look identical to the actual websites or emails of legitimate businesses that we transact with. Victims are asked to provide personal details, passwords and PIN, similar to the details they'd usually provide to make a transaction. Scammers can access your accounts and steal your money.
Much as you won't leave your bank account and mobile phone available when you're out, you need to safeguard information that enables access to your accounts.
Join the Staying digitally safe with your money during COVID-19 webinar for tips on using digital payments securely and just how you can protect yourself and your loved ones from scams.
You can sign up for this event that'll be happening on 26 August 2021 here.
#4 Upskill For the Future
According towards the advance discharge of the 2Q2021 Labour Market Report from the Ministry of Manpower, COVID-19 were built with a significant effect on the job market using the unemployment rate among Singaporeans climbing to 4% as of June 2021. Singapore also recorded its steepest stop by total employment, with total resident employment in Singapore, excluding Foreign Domestic Workers and Full-Time National Servicemen dropping by 121,800. Retrenchment numbers will also be increasing.
With new demands inside a post-COVID-19 economy, we need to find ways to upskill ourselves. Just one way of doing so, without needing to spend anything, is as simple as tapping on our SkillsFuture credits.
Earlier this season, the government announced that Singaporeans, aged 25 and above, would receive an additional top-up of $500 in SkillsFuture credits. This can be to build up additional skills or to deepen our understanding in areas that we're passionate in.
To help Singaporeans gain the relevant skills for the future, the federal government has presented extensive schemes to assist Singaporeans upgrade themselves and gain on-the-job experience. WSG works together with other organisations like NTUC's Employment and Employability Institute (e2i) to offer career coaching services, in addition to match fresh graduates and mid-career workers with relevant traineeships.
It can be us to take full benefit of these possibilities to learn, upskill, and remain highly employable for years to come.
Take Steps Right now to Improve Our Financial Resilience
Whether it's to manage our debt, review our investment portfolio, safekeep our money in order to upskill ourselves to stay relevant in the employment market, there are many active steps that people can take right now to improve our financial resilience for our future.
These good habits we set up today – and continue to practise in the future – goes a long way in assisting us reach our financial targets and supply financial to safeguard ourselves and our family members.