This article was written in collaboration with MoneySense and SIAS. All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.
As our country prepares to tackle her worst recession since independence, our ability to adapt to the changing economic situation is going to be critical to overcome this difficult period. While many businesses in Singapore are taking cost-saving measures to prepare themselves against the recession, individually, we also need to stay resilient to protect ourselves financially. In this article, we look at 4 steps that we can take today to improve our financial resilience, without having to spend more 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 have taken a housing loan to buy our home and would need to make monthly mortgage repayments.
Unlike discretionary spending like restaurant meals and overseas holidays, we are obliged to make our debt repayments every month even when our cash flow becomes tight. If we fail to make our repayments, we may incur additional interest costs.
If you find yourself financially stretched, there are a few things that you can do immediately to manage your debt.
Do not leave high-interest debt unpaid: Prioritise the repayment of high-interest debt first. These are the loans that will add the highest interest costs to your debt when left unpaid, making it even harder for you to get out of an already challenging situation.
Explore refinancing or use your CPF to repay your home mortgage: If you are taking a bank loan for your mortgage, you can consider refinancing if your loan is not within the lock-in period to reduce your interest cost. You can conserve cash during this period by utilising your OA to pay for your home mortgage. This allows you to use your cash to pay for other debts that you also have.
Defer your loan repayments as a last option: Earlier this year, MAS announced some relief measures to help individuals who cannot cope 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 have their own eligibility criteria so do check it out if you are intending to defer your loan repayments. Do bear in mind that these relief measures are not without cost, as interest cost is deferred and have to be repaid later in the form of higher monthly repayments.
If you wish to find out more about how you can manage your debt, there is a My Money webinar on 19 August 2020 that will discuss how Singaporeans can manage their money during COVID-19. Topics that will be covered during this webinar include debt management, financial planning during crisis and how banks are able to help their customers during this period.
The webinar is free. You can sign up for this event here.
Read Also: MAS Deferred Payment Scheme: Should You Defer Payment Of Property Loans If You Don’t Need To?
#2 Review Your Investment Portfolio
Due to the economic impact of COVID-19 on many countries and industries, 2020 has been a volatile year for the financial markets.
For Singaporean investors (e.g. older investors) who prefer not to have a high exposure to the financial markets during this period, one way to continue earning risk-free return is 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 one way for Singapore investors to continue earning decent returns without needing to be worried about the volatility of the financial markets. Do note however that topping up your CPF account is an irreversible decision.
If you wish to have greater liquidity, consider the Singapore Savings Bonds. The advantages of these bonds are that 1) you can redeem them at any month without penalty and that 2) the value of the bonds do not fluctuate – so you are always guaranteed your capital investment upon redemption or maturity of the bonds.
If you want to find out more about how to allocate your assets and what to expect for the rest of 2020, there will be a My Money webinar on 22 August 2020. Besides the discussion about stocks, bonds and ETFs, the webinar will also share about REITs, a popular asset class in Singapore, during this period.
The webinar is free and you can sign up here.
#3 Safekeep Your Money
Many of us are enjoying the convenience of digital payments for much of our day-to-day spending, such as ordering food online, paying for things using our mobile phone, or transferring money to our friends. However, along with great convenience and speed of these services, comes with increased opportunities to fall prey to scams if we’re not careful.
ScamAlert, a website by the National Crime Prevention Council (NCPC), identified e-commerce scams as the most common type of scams with 2,467 cases reported from January to May 2020, causing a combined loss of over $3.2 million.
Besides e-commerce, phishing is another common scam. An example of this is where fake websites or emails are created 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 would usually provide to make a transaction. Scammers can access your accounts and steal your money.
Much as you won’t leave your wallet and mobile phone lying around when you are out, you need to safeguard information that allows access to your accounts.
Join the Staying digitally safe with your money during COVID-19 webinar for tips on using digital payments securely and how you can protect yourself and your loved ones from scams.
You can register for this event that will be happening on 26 August 2020 here.
#4 Upskill For Your Future
According to the advance release of the 2Q2020 Labour Market Report from the Ministry of Manpower, COVID-19 had a significant impact on the job market with the unemployment rate among Singaporeans climbing to 4% as of June 2020. Singapore also recorded its steepest drop in total employment, with total resident employment in Singapore, excluding Foreign Domestic Workers and Full-Time National Servicemen dropping by 121,800. Retrenchment numbers are also increasing.
With new demands in a post-COVID-19 economy, we need to find ways to upskill ourselves. One way of doing so, without having to spend any money, is by tapping on our SkillsFuture credits.
Earlier this year, the government announced that all Singaporeans, aged 25 and above, would receive an additional top-up of $500 in SkillsFuture credits. This can be used to develop new skills or to deepen our understanding in areas that we are passionate in.
To help Singaporeans gain the relevant skills for the future, the government has rolled out extensive schemes to help Singaporeans upgrade themselves and gain on-the-job experience. WSG works in partnership with other organisations like NTUC’s Employment and Employability Institute (e2i) to offer career coaching services, as well as match fresh graduates and mid-career workers with relevant traineeships.
It is up to us to take full advantage of these opportunities to learn, upskill, and remain highly employable for years to come.
Take Steps Today To Improve Our Financial Resilience
Whether it’s to manage our debt, review our investment portfolio, safekeep our money or to upskill ourselves to remain relevant in the employment market, there are many active steps that we can take today to improve our financial resilience for our future.
These good habits we put in place today – and continue to practise from now on – will go a long way in helping us reach our financial goals and provide financial security for ourselves and our loved ones.
Read Also: #Resilience: Here’s Why Singapore Will Not Only Survive The COVID-19 Recession – But Thrive
Advertiser Message
Switch, spend & score up to S$750 with DBS
Power up your payday with up to S$750! Credit your salary to DBS/POSB to get S$300. Apply & spend with DBS Live Fresh Card to earn up to S$450 more. Register by 30 June 2025. T&Cs apply.
