Like the rest of the world, Singapore’s economy has faced significant negative impact, due to the COVID-19 pandemic. Employers were, and continue to be, left with little choice in respect of cost cutting. Unfortunately, these costs include staffing and recruitment, which means that over and above health, well-being, and safety concerns, Singaporeans are also anxious about being retrenched.
Facts speak louder than words; in 2020 alone, Singapore recorded one of the highest retrenchment periods our country has faced in the last decade, with approximately 26.1 thousand workers being let go1. The declining job market has led to Singaporeans feeling not as optimistic about finding new jobs. Some of their biggest worries2 include unemployment rates, difficulties in job searches, and losing their jobs.
The possibility of being retrenched haunts many across the island nation, not just from an emotional or psychological standpoint, but also a financial one. Most people are stressed about the financial implications2 of being retrenched, and the impact this can have on:
• Long-term financial health; and
• Current and future debts such as loan repayments, credit card payments, or providing familial support.
Retrenchment can lead to huge financial concerns, and have a detrimental effect on one’s financial plan, but there is good news – it’s possible to get back on the saddle. To ensure that you’re in control of your finances, here are some practical steps3 you might consider taking, some of which may not even be directly related to finances.
Retrenchment or loss of employment can be devastating to a person’s mental and physical health. But if you can find ways to remain calm, and take care of your own mental wellness, you will be in the best position to make the right decisions. Partake in physical exercise, talk to people who help you feel supported, and remind yourself that this is a phase you can overcome.
The Ministry of Manpower strongly encourages employers to make retrenchment benefits available to retrenched employees in line with the Tripartite Advisory4. While this is not mandated by law, many companies offer retrenchment packages, which you should discuss with your HR manager. This can help you arrive at an amicable settlement.
One of the first things you should do if you are in between jobs is to determine your burn rate – the time period that you can survive without an income. Take note of your savings and investments, and your debts and liabilities. This will give you a clear picture of your financial health, and help you check for any risks or gaps that you may be exposed to. Finally, get in touch with any entities to whom you owe money, such as banks, credit card companies, or third parties, to understand how you can best modify your repayment schedule, if the need arises.
During difficult financial times, one action that helps the most, is proper financial planning. This involves preparing a budget. Budgets help people work out their expenses and arrive at a realistic number of what their outflow is. Once you have your budget in place, you can tighten it to suit your burn rate.
Your retrenchment doesn’t just affect you – it also affects your family. During a time like this, it becomes even more important to sit down with your family (especially dependents) to explain your financial situation, and the implications for everyone. While the conversations may be difficult, they are necessary. A little support from each other in terms of cutting back on some costs will go a long way in ensuring your family comes through this setback stronger.
Speak to a financial consultant to create a robust plan that can help you manage your finances in the long run. Consulting an expert with the right experience and knowledge will allow you to keep your outflow on track and help you make financial decisions to weather this and future downturns.
Being in between jobs is tough, but it’s important to know that life is filled with opportunities. Sometimes, it takes us a jolt to realise them. Stay positive about finding a job; after all, we’re lucky to be living in the gig economy where finding, (or creating) a job, is possible. Consider new avenues, take time to rediscover yourself, spend time doing things you love, or volunteer! Above all, strengthen your financial resilience with a well-informed financial plan.
At SG Alliance, we understand that uncertainty is a part of life. To mitigate these uncertainties, we believe in supporting people in their quest to become financially sound today, so they can have contingency for tomorrow.
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