The writing is on the wall, Singapore is facing its worse ever recession and expecting the economy to shrink between 4 and 7 per cent in 2020. While you might not be feeling the financial impact of Covid-19 just yet, it’s prudent to re-look your finances and start making savings where you can and protect your financial health.
A side hustle, that’s what all the cool kids are doing, isn’t it? If you’re juggling homeschooling and fine-tuning your WFH home schedule, a side hustle might be too much. Instead, look to growing your side income. With the recent OCBC survey reporting that only a third of Singaporeans surveyed would have enough savings to survive beyond six months if they became jobless, it’s even more important to have a healthy stash of money set aside. Michelle Ngiam from Great Eastern Financial Advisers points to setting up a few streams of passive income. Start first by assessing a personal risk profile and the instruments – high: dividends, unit trusts, rental income from investment properties; low: fixed deposits, Singapore Savings Bonds – that fall in each category and explore what the market is currently offering. “You can also grow your wealth with a hybrid product like the Great Wealth Advantage plan offered by Great Eastern. It is a regular premium whole life investment-linked policy which also provides you with protection against Death, Total and Permanent Disability, and Terminal Illness.” Says Ngiam. “This plan also allows you to boost your investment with their Welcome Bonus and Loyalty Bonus. You can enjoy the flexibility of managing your investment with single premium top-ups, fund switches or opting-in to automatic fund rebalancing and the option to make partial withdrawals to meet any of your goals, be it short term or long term.”
That wardrobe rental service, beauty box subscription, perhaps it’s time to put them on ice till there’s a real need for it. Draw up a list of all your subscriptions and packages – from the gym to eyebrow threading, Spotify and LinkedIn Premium – in one Google Sheet and make a call on which are truly essential. For instance, do you need a paid Dropbox account (2TB a month for US$9.99 (S$13.96)) or will the 2GB free version do? In a year that adds up to US$119.88 (S$167.53). Look also for free or reduced-price trials (Amazon Prime, Netflix, Spotify) so you can “try” a service before deciding to commit for the long term. If you’re already paying most of your bills online, consider applying for the HSBC Revolution Card where cardholders earn 2 miles per $1 on local dining & entertainment as well as for online spend–including insurance premiums and bill pay.
If you have a mortgage, Ngiam advises having it refinanced or repriced. “By getting a better loan package, you will be able to make lower repayments. It is important to reduce debt levels as much as possible as this will help with your future expenses”. Simultaneously. use the opportunity to consolidate your credit card debt. Which ones are changing a hefty annual fee for dining privileges you’re not currently using? Set up automatic GIRO payments to avoid paying late interest fees (some cards charge up to 26.9 per cent) and if you can’t pay off your monthly credit card bill in full, focus on reducing the one with the higher interest rate first, or get a 0% balance transfer.
Growing one’s CPF money is something every Singaporean can do, regardless of income. If you’re iffy about risking CPF monies for investment purposes – being a retirement nest egg and all – start small. Begin by diverting some money to your SRS account, the tax-deductible sum instantly reduces your tax bill, and can be used for low-risk investments like purchasing Singapore Savings Bonds. It’s a baby step and the funds (and any profits) will be held in the SRS account, which eventually becomes part of your Retirement Account. Also, if you’ve settled how much of your Ordinary Account you want to use for housing and education, consider depositing excess funds to your Special Account where the 4 per cent interest rate is higher than most banks. If you don’t need the money urgently, it’s one way to keep building that nest egg.
If you’ve been paying attention to the financial headlines, you’ll know that the stock market doesn’t mirror the actual economy. While proper research needs to be done, there are several Robo advisors (e.g. Stashaway, DBS digiPortfolio, MoneyOwl etc) to kickstart your investment journey. In short, Robo advisors function as a digital advisory service that recommends an investment portfolio. The immediate pros start where the fees are typically lower than a bank or investment brokerage, and some, like Stashaway, require no minimum investment with a low 0.8 per cent fee and no lock-in amount. In short, it’s a low-risk way to give you a feel of the stock market – and if this is an investment choice you’ll be comfortable with long term.
Make it a habit to look through your bills on a weekly/monthly basis. Devote an hour a week to this and you’ll immediately become very familiar with your spending habits, good and bad. For a start, relook your telco contract and shop around for a deal that’s best suited for you. If it’s time to renew your mobile plan, consider downgrading (since you’ll be home more often) or to sign up with a new provider who’ll likely offer you a decent incentive to switch – and yes, you can retain your number for a small fee. Utilities are next if you haven’t already found the best open electricity market price for your household, click here for an easy-to-compare plan.
Simply put, if you want something, you can – but only if you need it after 30 days. By putting the purchase on ice, it puts a stop to impulse buys which adds up and gives you a chance to properly evaluate a need vs. want buy and to bootstrap what you currently have to fill the use case. This downtime will give you time to research the purchase so it’s a quality, value-for-money one. It may end up being higher-priced but if it lasts longer, requires fewer repairs or maintenance, or has a higher resale value, you’ll be better off in the long run. Think of it this way, if you buy a product for $200 and it breaks down in less than a year, then it would then make more sense to buy a similar product for $400 but that comes with a warranty and lasts three years. Also, consider clawing back some money using ShopBack which can give hefty discounts and potentially up to 5 per cent cashback on all purchases.
Food is something you just have to spend on, so while you’re at it, look out for deals that can help you save money. This could be in the form of one-for-one sale at the supermarket or a discount code on foodpanda.
For example, ION Orchard is offering meal deals when you order through their F&B stores. If you’re an ION+ Rewards Member, you can get $6 with a minimum of $20 spent when you order from a participating F&B store located in ION through the mall’s delivery partners, foodpanda and Deliveroo. Key in the code “ION6OFF” upon checkout to enjoy this deal.
Not an ION+ Rewards Member yet? Between now and December 31, 2020, sign up as a member and upload a minimum spend of $100 same-day receipts on the date of spend and stand to win 50 ION+ Points (worth $20 in shopping vouchers).
And while you’re heading there, you’ll be happy to know that currently, the mall offers free parking for the first hour with no minimum spend!
Having adequate health coverage during an economic downturn is a priority, however for some, we might be over-insured. Take a look at your active, policies to understand where you’re covered, and where you’re not. In lieu of an annual travel insurance policy, upgrade your personal accident insurance plan to one that has an Infectious Disease inclusion with Covid-19 coverage. Then there’s plans like Great Eastern’s GREAT Comprehensive Care that combines Hospitalisation Income, Personal Accident Coverage and Outpatient Care in a single policy for as low as $22 a month. For the self-employed, the daily hospital cash benefit of $100 for up to 365 days, and an additional payout of $100 a day if intensive care unit (ICU) admission (up to 30 days) means if something unfortunate happens, at least some form of income inflow can be expected.