People who count down to payday every month aren’t all poor. According to recent news reports, a lot of the people who end up in credit counselling because they can’t pay off their credit card debt are actually—surprise surprise—highly paid professionals, the same people you see sipping cocktails at Marina Bay. Heck, the news report says there is at least one person who’s been proudly featured in Tatler who is also secretly going for credit counselling.
Even if your next paycheck manages to save you every month, that doesn’t mean you’re not in trouble. Here are three things you need to do.
Accept that your lifestyle needs to change
The problem is that many people living from paycheck to paycheck don’t actually realise there is a problem if they’re managing to keep their credit card debt under control. Many Singaporeans who save nothing at the end of each month just tell themselves that someday, their salaries will increase, and then they’ll be in a better financial situation.
Now, if that were the truth, only low income earners would be in credit counselling. The problem is that when you’re used to spending as much as you can possibly afford, you’re likely to fall prey to lifestyle inflation each time your salary increases—that means you raise your spending when your income rises. You might have been carrying Guess? handbags when you were a student, but when you get your first job you upgrade to Coach. By the time you hit your late 20s, you’ve started buying products from Chanel, and so on. In addition, even if you’re not inadvertently inflating your lifestyle, remember that due to inflation things are going to get more expensive over time anyway.
The upshot is that, for each and every one of you living from paycheck to paycheck, your lifestyle is going to have to change. Something’s gotta give. How you wish to cut back is up to you and depends on your priorities and current spending patterns.
For many Singaporeans, that could mean cutting down on the number of restaurant meals they eat per week, banning themselves from shopping or cancelling their gym membership. Whatever you choose to do, accept that you’re going to feel the pinch. Being prepared to suffer (just a little) is the first step towards cutting your spending.
Re-examine your social circle
Peer pressure might be something you thought ended with secondary school, but sadly that’s not the case with many Singaporeans. In fact, a conformist culture, a need to keep up appearances and just plan kiasuism has resulted in many grown adults here paying through their noses for senseless things like these.
For many PMETs in their late twenties and thirties, spending on socialising, entertainment, food and vacations is what eventually sends them to credit counselling. I used to be one of those office workers at Raffles Place too, and have seen first hand how many of the young employees in the area are pressured to spend.
Young PMETs generally do not take cost into consideration when organising dinner or drinks, and it’s seen as poor form to try to get people to change their location because you’re too cheapskate to fork out $50 for a meal.
If you can relate, you should probably re-examine your social circle and how you spend your free time, because there’s a high chance your social spending is responsible for your poor control over your finances.
Automate your savings
To be very honest, I do not automate my savings at all. But that’s because I’m the type of person who never buys anything before first checking if Daiso has it and have a grand total of five outfits on rotation. If you live like that, you’re probably not living from paycheck to paycheck either.
It’s those people who actually find it difficult to save who should be automating their savings. Open a bank account to which you don’t have an ATM card and transfer your designated savings amount automatically the minute you get each month’s salary. Alternatively, you might want to consider signing up for one of those savings plans that will force you to contribute a certain amount each month. Some of these plans are linked to life insurance, while some aren’t.
You might feel like a child with CPF-style enforced savings, but if you really lack the discipline you gotta do what you gotta do.
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