Living paycheck to paycheck is a thing that most Singaporeans do. While it is assumed that those who live paycheck to paycheck are Singaporeans with low incomes (and so they can’t afford to save), this isn’t true. Some Singaporeans who live for their next paycheck are people who spend their monthly incomes because they have money elsewhere. To this group, since it is just the monthly salary they are spending, they are still safe financially.
This kind of thinking is the direct cause of the debts that several Singaporeans, young and employed, suffer with on a monthly basis. Saving money is difficult because of these debts. It doesn’t matter that you have an alternate revenue stream: saving money is crucial. Living from paycheck to paycheck and accruing debts on the way, even if it is just your monthly salary, is damaging to your finances.
If you still aren’t convinced, then consider these few points. They might be what will trigger you into saving more and spending wisely.
Anxiety Over Retaining Your Job
Living paycheck to paycheck has a requirement: that you earn a paycheck. This is something you may not think about often, till you realize that your expenditures pass your earnings. When your debts start to pile up, that is when your job seems more important than ever. This increases the pressure on you to maintain your job. The increased pressure is totally uncalled-for, and can only stress you out a lot and affect your performance on the job.
Becoming obsessed with holding down your job is not something that will help you at this point. Stressing yourself that much can only be bad for you, you could lose that job. Losing your job could be as a result of many things, such as not being a risk-taker, refusing to learn new things to maintain the status quo or a change in behaviour.
When your thought processes change from rising in your place of work to keeping things just the way they are, you are effectively hurting your job. Losing your job because you refuse to grow happens more often in the business world today. This is because having a passable skill set is simply not enough to retain any form of employment. Employers are more interested in people who can bring new ideas to the table, who can make contributions that lead to strategic growth and development. To bring forth these ideas, you usually need to think outside the box. Go outside your position in that company and envision what you can do to make the entire business better.
Because you live paycheck to paycheck, you become very anxious about your career security. This unhealthy focus can affect your work and your mindset, keeping you in that position for a long time – or getting you sacked from it.
No Emergency Funds
There is a shocking number of working Singaporeans who
a) don’t own emergency funds
b) have no idea about the importance of emergency funds.
Do you also fall into this category? Then this is for you. Going from one month to the next, continuously living from paycheck to paycheck, already indicates a lack of savings. At least you should have some funds set aside for emergencies, but those are absent as well.
Emergency funds exist to take care of all sudden monetary needs that are bound to crop up. An emergency fund is different from your savings since it has a different use: savings and emergency fund should be kept separately. No one wants to have to use up their savings for a sudden, impromptu event. You shouldn’t have to: that is what emergency funds are for.
An emergency fund is set up to pay for any sudden financial issues that may arise. This includes paying rent, a hospital bill, or paying the salaries of your staff when revenue hasn’t been steady.
There is no need to stress the importance of having an emergency fund. What you should worry about is living paycheck to paycheck, with no plans for the possibility of losing your savings in one swoop. Without an emergency fund, you will be in a lot of debt without much hope for bailing yourself out.
Lack of Discipline in Budgets for Saving and Spending
Any financial adviser worth their salt would tell you that, accounting for how much you plan to spend is just as important as making a budget for your savings. You need discipline to spend, just as you need the discipline to save. It is important to establish that discipline and pattern of budgeting your savings and expenditure early in life. It will be of great benefit to you when you go into retirement.
CPF (Central Provident Fund) is paid out only when you retire. Why isn’t it paid out every month? Observing the expenditures of the average Singaporean answers that question. If you were to receive your CPF on a monthly basis, there is every possibility that you will spend it all before retirement kicks in. What will you do then? It is alright if you are concerned that you aren’t in control of your expenditure; you are on the right track. It is better to realize that you need discipline, and then take steps to work on it than to simply ignore it.
If you really want to be financially secure during retirement, there is insurance that you can get for that purpose. These insurance plans arrange payouts for you per month when you retire, a structure that supports your pension. Some plans are structured in the way that you have a constant payout stream for the rest of your life. These payouts will remain so for a partner or entitled family member in the event of your death. You can get insurance coverage with these types of insurance plans, and make sure that your expenditure is restrained in your retirement years.
Living from paycheck to paycheck can rob you of a stress-free life. It is important that you start to take steps today to maintain a healthy spending habit, have some savings for retirement, and set up an emergency fund.