If your annual increments have been so pathetic of late you’re actually losing money to inflation the longer you stay in your job, then you have some new people to commiserate with quite soon—recent news reports have been pessimistic about wage growth in 2016.
Basically, don’t expect your salary to rise as much this year as it did last year, with an average forecast of 2.5% to 3% across all industries. Let’s all hope SMRT don’t decide to raise their fares again this year.
Here are some ways to make sure your income and savings don’t suffer during this dry spell.
1. Find alternative ways to increase your salary
For the vast majority of wage-earning Singaporeans, a boost in income only comes once a year, during the bonus-and-increment announcement—or when they quit their jobs for an employer who’s offering more.
Given the lousy employment outlook this year, not only are wages going to stagnate, it’s also going to be harder to find a new job.
Still, that doesn’t mean you should give up trying to raise your income anyway. Your company may not be raising salaries by much this year if you continue to stay in your current post and do the same old thing. But if you are able to upgrade your skills in order to get promoted or shift to a higher earning position, there’s no better time than the present. (If you’re considered a low skilled worker, you actually have the biggest chance of boosting your income in this way based on proportion, so use that SkillsFuture credit.)
So for instance, technical people who’ve been in the game for a few years might want to look into gaining project management or managerial skills to give them a push up the ladder.
If you are being underpaid and are thinking of asking for a raise this year, you want to first make sure it’s going to be cheaper for your company to pay you more than to hire someone new. If you’re nothing more than a hired monkey, there’s plenty more of those out there. So make an effort to demonstrate that you’re adding real value to the company.
Sad to say, this often means showing you are able to be more productive or do more than others. The key word is “show”. If your boss doesn’t know you’re doing more, it doesn’t count. Now is probably a good time to have that all-important talk with your supervisor about taking on heavier responsibilities or widening your job scope.
2. Make the effort to widen the gap between your income and expenditure
Many Singaporeans take wage growth for granted, and you often hear people talking about how they expect to be much wealthier in ten years’ time. This kind of thinking makes people sloppy about keeping their lifestyles in check. The reason you see Singaporeans earning $4,000 taking loans to buy cars is probably because they think they’ll be earning a lot more somewhere down the road.
At this point, inflating your lifestyle is the last thing you want to do. If you receive a below-average increment, your purchasing power might actually fall due to inflation. The gap between your income and your expenditure could actually start shrinking.
This is the year you want to consciously try to increase that gap. If you have a budget, the first thing you want to do is to to allocate more of your income to savings. In the event that your wages aren’t able to keep up with increases in the cost of living, you’ll be glad you cut back earlier. You just need a bit of discipline—it’s not really that big of a deal if you eat at home one extra time per week, cut your shopping budget or downgrade to a cheaper mobile data plan, so don’t be such a drama queen.
You also want to make sure you do not take on more debt, as you are probably not going to be getting a big bonus to magically rescue you at the end of the year. This is not the year you want to sign yourself up for a car loan or get into credit card debt over your LASIK surgery.
It’s also a good time to look into setting up some passive income streams as a way to boost your income. Whether that means taking on a side job, renting out a room in your flat or telling your kids to get part-time jobs and earn their own keep depends on you. Follow us on Facebook as we share more ways to do that.
3. Look into growing your savings
If you’re one of the many young Singaporeans who can’t be bothered to learn how to invest, you might want to worry about it now. If your job isn’t quite the goldmine you thought it would be, you’d better make your money work harder for you.
You might not have a huge amount of cash savings, but you don’t need that much to invest on the stock market due to the reduced lot sizes.
Other options include ETFs or, if your risk appetite is low, bonds or even fixed deposits. If you are young and still have many working years ahead of you, try not to park much of your money in the latter, as the interest rates are still too low to beat inflation.
Whatever you do, don’t just let your savings sit there. If you have a big enough emergency fund and never spend more than you earn each month, you shouldn’t have to worry about not having enough cash if you invest everything else.
Your job isn’t going to help you grow your wealth, so find ways to do it yourself.
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For more money tips, check out these 6 ways your forgetfulness is costing you a lot of money