That peace of mind when you’re not worried about your income covering your expenses, the little luxuries and future financial goals? That’s the feeling of financial security, and in the ongoing wake of the Covid-19 pandemic, Singaporeans are feeling less confident about their personal and household financial scenario.
This year’s GoBear Financial Health Index gathered insights from over 1,000 Singaporeans to understand what they felt, thought, and doing about their money matters – and the findings around financial security were enlightening.
The facts surrounding Singapore’s economic future is not a positive one. While monthly unemployment rates released by the MOM have not spiked, they are gradually rising and August saw the resident unemployment rate rise by 0.4 percentage points to 4.5%. While this is still lower than the unemployment rate during SARS (6.2%) and the 2009 global financial crisis (4.9%), the writing is on the wall.
Singaporeans are less confident about their household financial situation in this pandemic
Singaporeans are already feeling the squeeze. Of the individuals surveyed, 6% more people feel less financially secure vs 2019, a pessimistic outlook shared by our Asian neighbours (Vietnam, Hong Kong, Indonesia, Philippines and Thailand). Based on findings in 2020 vs 2019, Indonesia registers the highest change in sentiment at 14%, while Hong Kong registers the lowest percentage change at 4%.
| Read more: Do Singaporeans have enough savings for an economic crisis? |
While Singapore is optimistically in Phase 3, a pre-Covid status quo is still a long ways away as economic and income instability continues to contribute to a decline in household savings. In the area of financial security, there’s been a 0.1% decline in Singaporeans feeling less confident about their household financial situation. vs 2019’s numbers. Correspondingly, 48% (vs 32% in 2019) now feel unstable economic conditions are a key contributing factor to their future financial security.
This feeling will only grow more intense as Singapore predicts an economic contraction of 5.8%. In response, many companies are taking pre-emptive steps – introducing pay cuts, wage freezes and even reducing working hours – to absorb the impact of Singapore’s worst recession yet and revised national growth figures slashed from between -4% and -7%.
A slowing economy can only mean a few things: rising unemployment numbers (Singapore’s jobless rate is currently at a 10 year high), ongoing job and income instability, retrenchments more than doubled to 8,130 in the three months ending June. An uncertain future also brings along challenges for individuals to commit to any mid-to-long-term plans. Already 55% of respondents have reportedly reduced their savings to cope with the pandemic fall-out and 70% of working adults say they do not have enough savings to sustain them beyond 6 months.
| Related: Cash in the time of COVID-19: Should you get a personal loan? |
While government incentives like the Jobs Support Scheme – where wage subsidies are provided to help firms retain local workers – has been a lifeline for many businesses, realistically, it won’t last forever. No surprise, 35% report that they have plans to secure a second job to pad their primary source of income and 47% (vs 54% in 2019) of respondents now feel their cost of living is outpacing their spending, many proactively spending less on a day-to-day basis.
While it’s clear we’re not out of the woods yet and won’t be for a while, taking the appropriate steps – getting a financial plan together, securing emergency funds, knowing your employee rights around issues like pay cuts and no pay leave etc – is doable and a way to guard against these uncertain times.