Opinion

3 Key Finance Tips for Singaporeans From Budget 2017

budget 2017

Joanne Poh

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It’s no secret that we’ve got a fiscally prudent government. Love ‘em or hate ‘em, this is not a government that will spend public money in a way that would draw down the national reserves extensively or put the country in debt.

As individuals, here are three things we can learn from the government’s approach in Budget 2017:

 

Manage your spending

Singapore is most decidedly not a welfare state. Social spending has increased considerably in recent years, including the introduction of the Workfare Income Supplement scheme and the Workfare Training Support scheme since 2007 and 2010 respectively. But principles of self-help, family support, as well as community involvement remain. This overall approach ensures that public funds can be effectively targeted.

That’s why, for instance, when you lose your job, the government focuses on getting you back into the workforce as quickly as possible, such as by making skills retraining available, rather than simply providing unemployment insurance payouts.

Being prudent, even a little tight-fisted with spending, has enabled Singapore to enjoy its strong fiscal position up till now.

However, expenditure in areas such as healthcare and infrastructure are set to rise in the coming years. The ageing population and the need to upkeep existing infrastructure such as road and rail even while building new amenities are clear for all to see.

All that money has to come from somewhere, and the government has been monitoring public spending like a hawk, even lowering the budget caps of ministries and agencies, as announced at Budget 2017, to emphasise the need to spend carefully.

Singaporeans, too, can take a leaf out of the government’s book, as truth be told, we might be facing some uncertain times ahead.

So, before buying that dream car you’ve been eyeing, or even plonking down cash for a lavish holiday, ask yourself if you’re making a wise spending decision, and always err on the side of caution, especially if it’s just about meeting material desires.

 

Plan for your future

Of course, capping or reducing spending represents just one way of ensuring that future needs can be met. It’s also necessary to consider if there are sustainable ways to increase one’s revenue in order to finance future spending and investment.

A point emphasised in Budget 2017 is the need to grow the economy, which will help us strengthen the revenue base in order to finance growing expenditure. This has to be done carefully, and in a pro-growth and progressive manner. To simply increase tax rates across the board would send the wrong signal, not just to residents but also to foreign investors.

Just like how the government seeks to ensure that revenue growth keeps pace with spending, you too, can take steps to proactively manage your career so that your earning potential rises over the years.

Stay ahead of the pack by taking the initiative to pick up new skills, whether through formal learning such as going for company training or attending SkillsFuture courses, or through informal learning such as learning from your colleagues and on your own via MOOCs or even YouTube. Also, make time and effort to expand your network of contacts as you will never know if that may yield better you career opportunities in future.

 

Think about investments

Budget 2017 saw many investments in social security and economic transformation, which are possible because the country started from a strong base, with a financial standing accumulated from decades of saving and careful investing.

A strong fiscal base has allowed the government to respond swiftly and direct funds to address medium- to long-term economic challenges so as to ensure that our future remains secure (e.g. they’re now working to turn Singapore into a big data analytics hub).

As individuals, we too need to invest to ensure a comfortable future. No matter how humble your beginnings, put aside some of those dollars towards your first investments. For example, the Singapore Savings Bonds are a safe and flexible way to invest for the long term and you can start with as little as $500.

Starting your investment journey as early as possible also gives you a big advantage when you’re older. No longer do you need to rely just on your salary each year. You can also tap on your investment returns.

Similarly, Singaporeans have been able to benefit from some forms of government transfer such as S&CC rebates, contributions to Child Development Account and SkillsFuture Credits each year to supplement their income. Such government transfers are funded in part from returns from the national reserves, and are only possible because of prudent and careful financial decisions made earlier.

We may all complain that money no enough, but we all need to strike a balance between different spending needs today, between expenditure today versus tomorrow, and between cutting back on spending or raising more revenue.

But the facts of life don’t change, and we are all going to get older. It’s important that we make careful and prudent decisions today to plan for our own financial future. It might seem tough at the moment, but your future self will certainly benefit greatly from the decisions you make right now.

How are you planning for 2017 and beyond? Tell us in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.