From The Straits Times    |

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Samantha Tan was retrenched from her tech job last November. An IT project manager there for two years, she is worried about how long her savings can last, especially with inflation and an increase in GST driving up the cost of living in Singapore.

“Seeing all the news of retrenchments, I can’t say that I’m not worried about my job prospects. There’s lots of competition and because of inflation, everyday items such as groceries have now become so expensive! I’ve definitely had to cut down my discretionary spending,” she says.

The 38-year-old says she has started cooking her own meals at home and opting for cheaper options when dining out, or just having a coffee instead of brunch when out with friends. She also hasn’t renewed her Virgin Active gym membership, and instead follows Youtube workouts at home since she now has “more time and less money”.

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She counts herself lucky that she lives alone and has no children, although there are still monthly insurance and telco bills to pay. Her HDB mortgage comes from her CPF, so she doesn’t feel the pinch as much, but her biggest concern is that her elderly parents don’t have health insurance.

“I know of others who have been impacted, and are worried about providing for their young kids. My immediate concern now is making my savings stretch for more than six months and to start looking into buying insurance for my parents,” she says.

2023 saw Singapore once again emerge as the world’s most expensive city tied with Zurich, according to the Economist Intelligence Unit.

In fact, Singapore’s core inflation hit 5.5 per cent, higher than pre-pandemic levels. Price pressures are expected to remain high in 2024, with the Goods and Services Tax (GST) increasing from 8 to 9 per cent at the start of 2024, public transport fares up by 7 per cent, an increase in gas and electricity prices due to a higher carbon tax and rising energy costs. Meanwhile, mortgage rates are expected to remain high this year, although housing prices are not expected to increase after resale prices rose in 2023 and 2022.

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With the higher cost of living, it’s no surprise that money is one of the biggest worries for many. According to UOB’s Asean Consumer Sentiment Study 2023, 81 per cent of Singaporeans are worried about their finances due to rising inflation rates and increasing household expenses, which impacts their ability to save and maintain their lifestyles.

Similarly, the OCBC Financial Wellness Index 2023 found that Singaporeans are saving less, and are not prepared for emergencies. Fewer are able to comfortably spend beyond the basics. The Index has fallen from 2022’s score of 61 to 60, indicating that rising inflation, high interest rates and growing fears of an economic slowdown have made respondents more cautious about spending and taking on debt.

“2023 has been yet another tough year, with the continuation of high interest rates, inflation and turmoil in the financial markets. All of these are reflected in this year’s results, with the Index at its lowest since we started in 2019,” says Tan Siew Lee, OCBC’s head of Group Wealth Management.

Transform financial anxiety into financial empowerment

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So how can we reduce some of this anxiety?

“A great deal of self-awareness is necessary for us to ascertain whether our ruminative thoughts are growing beyond an excessive level. It does take effort as well to pull ourselves back from repetitive, negative thinking,” says Bernice Lim, founder and principal psychologist, Asia Psychology Centre. It’s also important to increase one’s perceived control over one’s finances. “Having clarity over the state of our finances helps us feel less anxious. An organised approach to managing our finances tends to increase perceived control over them,” she says.

Taking actionable steps to improve your financial knowledge and situation is also key. Dawn Cher, better known by her online moniker SG Budget Babe and her personal finance blog, says to start by saving.

“The real measure of financial security lies not in how much you make, but how much you keep. Plenty of high income earners can feel poor because they’re terrible at managing their finances – the problem doesn’t go away just because you earn more, it only gets magnified,” she says.

What has worked for her is making changes to small things from using credit cards to earn miles or cashback, subscribing to newsletters to be notified on discounts, and using discount apps for food.

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“First, you need to start by reviewing your expenses to understand where your money is going. From there, you’ll be able to identify categories where you can make use of different hacks to save more money,” she says.

Sharing some suggestions, she says it could be buying house brands for groceries and earning loyalty points, skipping drinks such as coffee and bubble tea, eating out at cheaper places, and even taking the MRT before 7.45am to save $0.50.

Larger expenses that require more thought could be cutting down on overlapping insurance policies without incurring penalty fees, reducing holiday expenses, and looking at refinancing one’s mortgage.

A well-planned budget is necessary as well. Dawn suggests setting aside 5 to 10 per cent of one’s budget as a “happy fund” for things that you enjoy, so you don’t have to completely deprive yourself and be unhappy about your situation. She adds: “A gym or other subscriptions could be a white elephant for some folks, while being a complete necessity for others. Some may say that my $8+ Viu subscription is a want, but watching my Korean dramas helps me destress, so that is a small price to pay for my mental sanity!”

Once you have your savings and budget planned, you can then start investing.

Grow your money

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When it comes to investments, venture capitalist Sharon Sim, co-founder of Purpose Venture Capital, shares three tips: compounding, diversifying one’s portfolio, and seeing investing as a marathon. She adds that it’s not advisable to make hasty decisions based on short-term market movements or fear.

While both Sharon and Dawn acknowledge that it can feel daunting to start investing, it’s better to start than not at all.

“Learn how to invest and do not simply rely on men. It isn’t that difficult either. In fact, it has become easier for women today because of the huge amount of resources available,” says Dawn. Sharon adds: “There’s no shame in seeking professional advice or asking friends who have investing experience to help you learn.”

Above all, she says to remember that “you are your best investment” and not to feel guilty about investing in one’s self, be it in finance, well-being or passion projects.

“The real measure of financial security lies not in how much you make, but how much you keep. Plenty of high income earners can feel poor because they’re terrible at managing their finances.”

Dawn Cher

Don’t leave financial anxiety unchecked

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Symptoms include interrupted sleep or difficulty in falling asleep, volatile moods, feeling unmotivated or apathetic, and may ultimately affect your daily functioning. Increasing lethargy is also another symptom.

Some of Bernice’s clients who are expats and have moved here with their families worry about coping with rising rents, while job restructuring has also led to three of them having to leave Singapore.

Locals have cited the high cost of housing that makes it tough to move out from their family homes, adding more stress to their quality of life, while high renovation costs and construction delays have also increased the stress on couples with younger children.

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Left unchecked, this anxiety may become a clinical disorder.

“If an individual chooses to ignore early warning signs, especially if they have been there for a while and have been escalating, there is a possibility of developing a clinical disorder – ie the individual might experience the symptoms mentioned at an even higher severity, and frequency,” she says.

If symptoms get unmanageable, seeing a therapist may help. Bernice explains that the goal is to help individuals identify behaviour patterns that may be worsening financial anxiety. “Increasing self-awareness to the signs and symptoms of mounting anxiety, regardless of the stressor, can help us identify the more effective plans to address them,” she says.

“Having clarity over the state of our finances helps us feel less anxious. An organised approach to managing our finances tends to increase perceived control over them.”

– Bernice Lim

Recognising the signs of financial anxiety

Could you be anxious about your finances, but not realise it? Bernice shares how anxiety may affect you:

  • Trouble falling asleep, or waking up at night
  • Mood changes
  • Daily functioning is affected
  • Relationships may suffer

What can you do about financial anxiety?

  • Increase perceived control over your finances: Be more aware of your spending to be able to manage your finances better
  • Reduce doom scrolling: Too much depressing news may increase anxiety unnecessarily
  • Do not compare with others’ lifestyles: Social media can drive up our perceived inadequacies since social media content tends to overinflate standards of living
  • If you feel that your symptoms are increasingly difficult to manage, you can always speak to a therapist