The much talked-about impending recession in Singapore has been confirmed. Singapore’s GDP is set to shrink, with growth forecasted at -4% to -7%, below the initial projection of -4% to -1%, according to the Monetary Authority of Singapore (MAS).
As we head into this recession, here’s how you can prepare yourself financially and mentally to stay afloat in this post-pandemic world.
An impending recession
Truth be told — the outlook is grim. With global travel grinding to a halt since early March, economic activity has dwindled and businesses, both domestically and abroad, have been hit hard. This not only applies to sectors that are directly affected by COVID-19 such as travel, aviation and tourism but also other sectors including retail and F&B. The MAS has also shared that Singapore’s economy could contract more sharply as a result of the severity of the outbreak in other countries as well as our own circuit breaker measures.
This would be Singapore’s worst recession on record. For reference, our economy contracted 2.2% during the Asian Financial Crisis in 1998 and stood at 0.1% during the global financial crisis in 2009.
To help save jobs, companies and livelihoods, the government introduced a massive $53.1 billion Resilience and Solidarity Budget on top of the $800 million COVID-19 recovery package announced in Budget 2020. Despite these efforts, there could be more job losses and wage cuts on the horizon. The government has since introduced yet another supplementary budget, a $33 billion Fortitude Budget to help save jobs and businesses.
With all the uncertainty surrounding COVID-19, it’s hard to predict the outcome of our consistent battle against it and the state of our economy a few months down the road. These difficult times could very well continue into late 2020 and beyond. It, therefore, becomes even more pertinent to brace and prepare ourselves holistically for a recession.
Here are 11 ways to do just that.
Steady your finances
At a time when pursestrings are tight, you can exercise prudence by taking these steps to be more financially prepared for a recession.
1. Clear outstanding debt
The first step to a healthy balance sheet is to clear your debt. This debt could be in the form of outstanding credit card bills, loan commitments or money you borrowed from an acquaintance. Most debts that we take on incur interest charges. This interest could range from a low 2.6% p.a from your HDB loan to 25% p.a that is charged on your outstanding credit card bills. Start by clearing high interest debt such as your credit card bills first.
Get started with these 4 ways to pay off credit card debt in Singapore. If you’re looking to borrow cash to clear your high-interest debt, you can also compare personal loan interest rates here.
2. Prepare an emergency fund
An emergency fund is a sum of money set aside to help you and your family tide through rainy days. It covers your expenses during times when you are unemployed or when your income is insufficient. At a time like this, having sufficient emergency funds of at least 3 to 6 months can give you greater peace of mind.
Besides having an emergency fund to cover for your expenses, here are 3 reasons why cash is king in uncertain times like COVID-19.
3. Cut down on unnecessary spending
Pre-pandemic, you might have been able to spend a bit more on a luxurious meal, the latest tech gadget or an overpriced Starbucks for your daily dose of caffeine. However, COVID-19 has introduced a whole new set of ‘normal’. As our worries shift to staying safe, protecting our loved ones and keeping our jobs and livelihoods, now is the time to cut down on unnecessary spending.
As we work from home, carry out home-based learning, and refrain from leaving our houses except for non-essential activities, we also have more time on our hands to make decisions that can help us reduce our expenditure. This could mean the little things such as opting for a cheaper mobile plan, finally switching your electricity provider, cancelling unused subscription plans and resisting the urge to shop online.
4. Organise your finances
Start staying on top of your finances. Keep track of all the outflow (and inflow) of money into your bank account. This means tracking your expenditure across all categories including your food, drinks, entertainment, online shopping, self-care products, memberships, insurance premiums and more. While at it, also keep a close eye on all your bills to ensure that you don’t miss payment deadlines.
Some of you might prefer to organise your finances using an excel sheet that allows you to format the data in a way that you prefer. For those looking for apps to help you out with your finances, here are a few for you to consider: Wally, Seedly, Spendio, Spendee, Wallet and DBS’s NAV Planner.
5. Stay invested
One way to grow our finances is to invest our money, be it through stocks, bonds, Exchange Traded Funds (ETFs), regular savings plans, robo-advisors, actively-managed funds or other investment vehicles. Markets have been known to show increased volatility during times like this. For example, the Straits Times Index (STI) has fallen more than 20% from $3,200 at the start 2020 to less than $2,500 in April 2020. It’s not about timing the market, but rather, time in the market. Staying invested gives your investments time to ride out market volatility.
However, if you are tight on cash, paying your bills and household expenses should be the priority. This could mean choosing not to invest at this point in time, putting your monthly investments on hold or reducing the dollar amount put in for your monthly investments.
A recession could also be a time of opportunity. For those looking to invest, here’s a guide to robo-advisors in Singapore.
6. Stay protected
During difficult times, the importance of insurance is second to none. The financial outlay incurred, should you meet with an accident, could have damaging repercussions on your family’s finances. Rather than cancelling your insurance plan to save on the premium dollars, you can opt to defer your insurance premium payments by 6 months. This could help alleviate financial burdens that families are currently facing.
Look after your mental health
Even before the official statement by MAS announcing this impending recession came in, Singaporeans have already been reeling from the effects of COVID-19. The issue of mental health has also been a worry during these unprecedented times.
7. Focus on your mental well-being
During this circuit breaker, most of the population in Singapore have been confined to our homes, with the exception of essential workers. This has introduced new, unexpected stress levels into our lives as we get used to working from home, and spending every hour of the day with the same people.
Pay attention to your mental state as well as of the family members living with you. Are you feeling more anxious than usual? Are you feeling the onset of cabin fever? An inter-agency advisory has since been released, sharing actionable things both employers and employees can do to support our mental well-being during these times. HealthHub has some stress relaxation techniques you can practice to help you relax.
8. Stay connected (virtually)
While we are all stuck at home to curb the spread of COVID-19, thankfully, we also have technology that enables us to stay connected regardless of where we are in the world. Make it a point to reach out to your extended family, friends and colleagues, be it through a Zoom call, Whatsapp message or Instagram direct messages. Check in on the people that matter.
This could help you to maintain a circle of social support and also give you a dose of social interaction to keep you going through the day. Your network could also come in handy, be it through a friend’s referral for a job opening or helping connect the right people to the right companies.
You can even send them some love by ordering them a care pack of your own, be it a coffee, burgers, or cookies delivered to their doorstep. Here are some food delivery promo codes to help you save a few bucks while you’re at it.
9. Stay active
While we’re not forbidden to leave our homes for a run in the park, we have been encouraged to exercise from the comfort of our homes. Indeed, this might be difficult for some, especially if we’re in our pyjamas all day. However, with our refrigerators merely a few steps from our home office, the need to burn calories has never been greater.
Reduce the inertia to exercise by changing into your fitness wear as your workday comes to an end. You can also grab a few fitness buddies to work out together over a Zoom session. ActiveSG now has a host of videos on their platform for fitness, wellness, nutrition and more. Besides working up a sweat, don’t forget to get sufficient rest each day, and to try and maintain a balanced diet.
For those looking to keep their weight in check during this circuit breaker, here are the best workout apps to try at home.
Protect your career
Retrenchment, pay cuts and no pay leave are amongst the harsh realities faced by those in the workforce as a result of COVID-19. Just a few months ago, no one could have imagined Singapore Airlines (SIA) would cut 96% of their flights and ground most of their planes. Today, companies in the tourism sector such as Tripadvisor, Expedia and Klook have been forced to let go of their employees; while others such as SIA have had to put their staff on no pay leave in order to stay afloat.
10. Learn a new skill
For those that are out of a job or have been forced to take no pay leave, this could be a blessing in disguise, giving you the time you need to learn new skills and potentially carve a new career path for yourself. You can sign yourself up for free online courses on websites such as Udemy, Coursera or edX.
For those lucky enough to still have your job, there’s nothing stopping you from upskilling and adding to your current skill sets. The government has also been encouraging Singaporeans to take this economic slowdown as a chance to upskill and reskill, even providing additional SkillsFuture credits to do so.
11. Start a side hustle to supplement your income
For those looking to earn additional income, start a side hustle. This could be taking on freelance work or part time jobs such as providing delivery services. The Singapore government has introduced the SGUnited Jobs Initiative to create more opportunities for jobseekers and workers affected by COVID-19.
To help you start on a new side hustle, here are 6 SkillsFuture courses you can spend your $1,000 credits on.
Help yourself to better financial shape in the new norm, with SingSaver’s all-new Ultimate Savings Guide! Got your free copy yet?
This too shall pass
COVID-19 has spared no country, race or religion. Recessions are here to stay. But even if we can’t control the economy, we can surely control our individual efforts to brace ourselves for the impact and put in place plans to emerge from this stronger than before.
Read these next:
How Will COVID-19 Support Grant Help You Financially?
5 Ways to Cope With Financial Setbacks Hitting Singaporeans Hard Amid COVID-19
10 Prudent Things You Can Do With Your Travel Fund If COVID-19 Has Derailed Your Trip
4 Common Money Mistakes To Avoid During COVID-19 Circuit Breaker
If I Get COVID-19, What Will I Need To Pay?
By Ching Sue Mae
A flat white, an adventure-filled travel and a good workout is her fuel. This Manchester United fan enjoys sharing knowledge on personal finance while chasing the dream of financial independence.