Coronavirus fears are at an all-time high. Global infection and death rates have increased exponentially as well - official global infections have more than doubled in less than a month, from less than 1 million at the start of April to more than 2.6 million at the time of writing.
Understandably, much of the world is now on lockdown to minimise the spread, but preventive measures have had devastating impacts on the economy, especially the travel, retail, F&B, and transport industries. In response, companies all around the world have implemented various measures such as wage and hiring freezes.
This has been seen locally as well. For instance, CapitaLand recently announced pay cuts and salary freezes for some staff, while state investor and CapitaLand’s major shareholder Temasek Holdings will freeze all salaries. Similarly, after reducing flight capacity, Singapore Airlines has also stopped recruitment and may implement pay cuts soon.
We are also beginning to see companies, especially those with poor business performance in the last financial year, take more drastic action. For example, travel agency Expedia, in response to poor business performance and coronavirus-related uncertainties, will be retrenching 12% of staff across all global offices, starting in Hong Kong and Singapore.
In times of poor economic outlook, individuals like us have little control and are often forced to accept such cost-cutting measures. What should we then do to minimise any negative impacts of economic recessions caused by epidemics or other factors?
Cut Down Unnecessary Costs
The easiest thing we can do (that is within our control) would be to cut down on unnecessary costs. In the digital age, almost everyone has a good mobile plan, high-speed wifi and access to content via streaming services. However, during an economic downturn, it is crucial to make sure that you are not overpaying for such services. One way to do this is to switch to a low-cost SIM-only plan. SIM-only plans can be as low as $18 per month for 20GB of data and other perks, which can save you up to $60 compared to the traditional postpaid contracts.
The same applies for subscription services. Did you know that in 2018, 55% of U.S. homes subscribe to an average of three on-demand services, generating a collective revenue of US$2.1 billion monthly? These individually low-cost subscriptions can and will add up to a significant amount. Taking the cheapest options, an individual will pay a minimum of S$7.50 a month for a shared Netflix account (S$19.98 for 4 screens) and Spotify Premium (S$14.98 for 6 people). Add in Amazon Prime (S$2.99), HBO Go (S$13.98), Sports Plus for the Premier League ($49.90)... You get the idea. Subscription services may give you access to tons of content, but do you really need them when finances are tight? Getting rid of some of these services may thus be the easiest way to cut costs quickly.
Another way to quickly cut costs is to cook your own food. Admittedly, eating out or ordering takeaway in Singapore (especially at hawker centres and food courts) can be a lot cheaper than in other parts of the world, but it will still add up. On average, Singaporeans spend about S$1,200 on food, of which more than $400 is spent at hawker centres and food courts. This can be minimised by cooking at home. Moreover, homecooked meals are often healthier and more holistic. This reduces your susceptibility to chronic illnesses, minimising future healthcare bills. Creating the habit of cooking your own food - especially during the Circuit Breaker - can hence help you save money while ensuring a healthier and happier lifestyle.
Supplement your income
Other than cutting costs, you can also prepare for incoming recessions by finding additional sources of revenue. Think about how your interests can provide value to others or how you can monetise your passions and hobbies, such as teaching beginners how to play an instrument, being a freelance designer, or being a driver for food delivery companies.
If you have the time, you can also purge your home of unwanted items. Split them into three piles: Throw, Donate, Sell. Valuable items in the Sell pile can be advertised on secondhand platforms like Carousell and Gumtree for extra cash. This might take a while though, so make sure you follow the next tip...
Save, Save, Save
Once you have expanded your net income, place a portion of it into a dedicated account used exclusively for savings. Find out which savings account gives you the highest interest rates and use the 50/20/30 rule: 50% on needs, 30% on wants, and 20% on savings. Even better, reduce spending on unnecessary wants and place a higher portion of your income into your savings to increase your financial stability and minimise the negative impact of future recessions.
Worried about losing your job during a recession? Already lost your job? The best thing you can do to enhance job security is to invest in yourself. This may seem counterproductive - upskilling is simply not a priority in economically uncertain times - but is a necessary cost to protect your financial stability, and may just be the wisest thing you can do. Self-investment can help you stay relevant by ensuring that you gain the relevant skills needed to stand out and stay employable.
This is recognised by the government as well. For years, the Singapore government has been encouraging and urging Singaporean Citizens and Permanent Residents to start acquiring in-demand skill-sets. In support of individuals looking to upskill themselves, a significant budget has been set aside for grants such as IMDA Critical Infocomm Technology Resource Programme PLUS (CITREP+), SkillsFuture Credit and more.
What skills should I learn?
Not sure what kind of courses to take? From cloud computing to data science, there are a lot of skills you could learn. Start by looking at the in-demand jobs in 2020, which are primarily within the digital landscape. Once you narrow down specific skills that interest you, watch online videos or attend free online workshops to better understand them, how they can be applied to your current job role, and how you can join the industry if you wish to.
If you're working from home now, this is the best time to learn a new skill. Use the time saved from travelling to make sure you can smoothly transition and excel in the digital age. All the best!
Written by Jacob Chong & Chloe Thio (Gen Infiniti Academy)