Last week, there was a harsh report from DBS that Singapore may lose 90,000 jobs due to the worst economic recession in recent decades, pushing the jobless rate to 5 per cent by mid-2010. It was further postulated that the economy may contract 4.8 percent in 2009.
Singaporeans have not felt the brunt of the economic hardships just yet. Yes, manufacturing and exports are in the doldrums but many companies are holding back on their layoff plans. Firstly, it is not popular, given that DBS was roundly criticized for using ”retrenching as a first resort” to save costs.
Then, budgetary measures like Job Credits have softened (or delayed) the blow and everybody is keeping their fingers crossed on a swift recovery in consumption. However, if global demand doesn’t pick up, the axe will certainly fall at some point. Meanwhile, the construction sector is still alive and kicking, a lot of construction companies have order books stretching till late 2010. After that, it is anybody’s guess what happens to this sole pillar of our economy.
In view of a protracted downturn in the job market, talking about financial freedom and retirement seems premature. The path to riches is fraught with pitholes, many investors have fallen by the wayside and need to slog even harder to make their portfolio whole again. Nevertheless, we should pick ourselves up, learn our lessons, and not lose sight of our financial goals.
Let’s go back to the basics of wealth building. There are essentially two ways to increase our cash. One way is to earn more money through investments, entrepreneurship or taking on another sideline job – seemingly futile exercises in this economic climate. Alternatively, we can cut costs by being frugal. In fact, saving money has now become a top financial priority among my friends, and me included.
A massive wave of frugality is expected worldwide. There is nothing wrong with saving money, it is only when everybody do it at the same time, that a self defeating effect of shrinking demand is felt keenly on the general economy. I am conscious of this downward spiral and have only cut back significantly on investments, rather than my spending on essential items.
Over the last two months, I planned a budget to improve my discipline in conserving cash and tracking my money. Being an easily contented person, I am happy with what I have without the monthly purchases of fancy and luxurious “stuff” to keep up with the Joneses. Thus, there was little adjustments to make as I have always lived well within my means. Read more…