3 traps that will make your life even harder if you're struggling financially

3 traps that will make your life even harder if you're struggling financially

The authorities might claim there are no homeless people in Singapore. But that doesn't mean there aren't a whole lot of people who are under extreme financial stress.

Judging by how low salaries can get here, it's surprising that low income earners even manage to stay alive. But even middle and high income earners aren't immune from financial stress, judging by the rising levels of credit card debt here.

Some of my friends who earn more than twice the median income complain that they're stressed out about money all the time.

Often it's because they not only have hefty financial obligations towards their families, but have also have signed up for hefty home or car loans.

If you're desperately short of cash and find yourself constantly preoccupied with how you're going to pay the bills next month, your options are probably more limited than someone who has more financial breathing room.

Quitting your job without a new one on the horizon, taking unpaid leave or switching to a lower paying position are out of the question. And don't even think of taking on fresh financial burdens like buying a new pet or enrolling in a part-time degree course.

That's a very stressful situation to be in. As you figure out how to dig yourself out of the hole, be careful not to do these three things.

Taking a short-sighted view of your finances and failing to plan

When you live from paycheck to paycheck, your eye is always fixed on the next payday. You're always monitoring how much money you have left in your account and hoping it will hold out till you get paid.

The problem with this sort of mentality is that it prevents you from taking a longer term view of your finances. It can seem futile to think of retirement when you're not even sure if dinner is going to consist of Nissin Cup Noodles for the next three days.

But you owe it to yourself to start thinking seriously about the future, because it will help you see what you need to do to get yourself out of this bad situation.

If your problem is that you save nothing at the end of each month, it's clear you need to either cut your spending further if possible, or to look for a new job.

Making big changes like that will require you to think about more than whether you can afford to order a meat dish with your economy rice.

Always going for the cheapest option

It's easy to see why anyone who's not earning nearly enough to support their spending would want to cut corners wherever possible. But the problem is that sometimes the cheapest option is something that can cost you more money in the long run.

In your desperation to make ends meet, don't lose sight of the longer term consequences of cutting corners on certain things.

For instance, if you are eating instant noodles every single day, expect your health to give out at some point, and when that happens remember it's "cheaper to die than get sick in Singapore".

The decision not to get a diploma or degree, while not fatal to everyone, would for many of us result in much lower salaries.

Skimping on medical insurance can also backfire on you, as MediShield Life has its limitations, and you could find yourself in a very bad financial situation should you fall sick or get injured.

Limiting yourself mentally

If you think living in Singapore is stressful, try living here when you have no money. It really, really sucks to be poor here, especially because the rich-poor gap is so wide and so darned visible. Society judges people according to how much money they have, and this places a huge psychological burden on those without money. They end up feeling like they're worth less as human beings.

I've seen many people squirm when they realised they were talking to some rich doctor or banker, and then refuse to divulge information about their own job.

Singaporeans who teach or studied in some of the, hmm, "less good" schools (because every school is a good school in Singapore, remember?) report that the kids, of whom an overwhelming proportion come from lower income families and troubled homes, constantly have their confidence eroded by teachers who discourage them from taking subjects that are deemed too difficult for them, and who communicate to them directly or indirectly that they should not set their sights on overly lofty goals.

This sort of self-limiting mentality will only hold you back. It takes a great deal of courage and gumption to take steps to raise your income or to alter your lifestyle.

It's easy to just say life dealt you a poor hand of cards and that you have "no choice" but to continue doing what you've always done. Don't become a defeated, self-pitying person no matter what society tells you.

The article first appeared on MoneySmart.


MoneySmart.sg is Singapore’s leading personal finance portal, and aims to help people maximise their money with powerful tools and engaging content.

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