Last month, OCBC Bank launched its OCBC Financial Wellness Index. The results of this index caught the attention of the public.
If you don't already know about this Financial Wellness Index and the insights from it, here's a reading list I recommend to get you started.
For those of you who like keeping score, Singapore respondents scored an average of 63 for the index. This coincides with what we would consider a "B" grade on an exam paper, or as how OCBC terms it, the "started but behind" stage of the financial journey.
The results didn't surprise me. In general, most adult Singaporeans I know are aware about the importance of financial wellness, which I would define as how healthy you are financially. This is akin to how most of us would agree that it's important to take care of our health.
At the same time, very few Singaporeans would consider themselves financial experts. We may have done a few things to get started on our financial planning journey, but we would also recognise that there are probably many areas for improvement.
THE PROBLEMS THAT SINGAPORE'S SANDWICH GENERATION WILL FACE
One part of the survey that really caught my attention - perhaps because I identified with this group - is the segment about the Sandwich Generation. This is defined in the study as working adults who have to support both their parents and children.
This portion is insightful. The Sandwich Generation has to deal with more financial gaps than other segments of the population (e.g. those who married without kids, singles) with more than half of these respondents (51 per cent) admitting that they find it tough to financially support both their parents and children. 31 per cent of them even said they have unsecured debts.
Many couples I know who fall within this Sandwich Generation face a range of challenges, either financially and/or having to deal with the multiple pressures and expectations in life. Some of them are struggling to cope with raising their families on a single income, typically when the mother stops working after the arrival of her second child. Others have to juggle between navigating their corporate careers while also finding enough time (and energy) to be present in their children's life.
And if you add on the need to support one's parents, financially and maybe physically, it's easy to see why the Sandwich Generation would feel like they are caught in between, finding it a challenge to support both equally important parties.
WHAT (WE) THE SANDWICH GENERATION CAN DO TO HELP OURSELVES?
The problem we face isn't a problem that is easy to solve. But simply sitting back and doing nothing isn't going to help our situation either. To get out of being sandwiched, here are some things you should consider tackling in your life.
ACTIONABLE ITEM 1: REVIEW YOUR BUDGET REGULARLY
When you have kids and elderly parents to support, you rack up additional expenditure each month that many of your friends without kids wouldn't have to incur.
For a start, the cost of hiring a maid in Singapore can easily add up to $1,000 a month. If you include childcare, meals, diapers, insurances and other necessities, you could easily be spending another $750 to $1,000 or more each month, per child.
While you could travel around on a wallet-friendly option like the MRT and bus, even a few hours out could tire you and your children out. You might find yourself incurring substantially higher transport costs when you rely more on taxi or private hire services. On top of that, if you are giving your parents an allowance, this could easily add up to a few thousand dollars each month.
When you become a parent, your variable costs each month are also ever-changing. There will be what appears to be an infinite amount of needs and wants to spend on and your meagre salary will appear hardly sufficient to cover the additional expenses that you need to pay for.
Consider prioritising and implementing cost-cutting measures sooner rather than later. Thankfully, with more e-commerce stores available today, you can easily do your own comparison of which site offers the better deal for the same pack of diapers from the same brand. Saving a few dollars on each purchase goes a long way to help you bolster the money you have available.
Also consider the types of products you are willing to pay a premium for. Perhaps you are not willing to compromise on the type of milk powder you buy your child, but you could cut back on your expenditure when it comes to their day-care backpack or clothing that they will quickly outgrow.
It's good to note that according to the OCBC Financial Wellness Index, 59 per cent of people who are part of the sandwich generation do review their financial plans yearly, as compared to Singapore's average of 49 per cent.
ACTIONABLE ITEM 2: CLEAR HIGH INTEREST DEBT QUICKLY
The OCBC Financial Wellness Index also reported that about 22 per cent of respondents who are in the sandwich generation and have unsecured debt, find themselves behind target when it comes to paying off this unsecured debt, as compared to Singapore's average of 18 per cent. Unsecured debt could refer to credit card debt or personal loans taken.
This is dangerous because these unsecured loans tend to incur hefty interest charges. When left unpaid, they can easily compound to become a large sum quickly, making the debt even harder to pay off. This is why one of the first things you should be doing is to clear these unhealthy high interest debts as quickly as possible.
ACTIONABLE ITEM 3: PLAN AHEAD FOR THE FUTURE
One of the biggest advantages that the sandwich generation can claim for themselves is that many of us are still young and have time on our side.
Sure, we may no longer be in our 20s, but it's not too late to get started. While many of us love to embrace the YOLO lifestyle, the truth is that living only once also means that it's important to plan early on whatever it is that we want to achieve in our lives.
This could mean
- Starting our investment journey early while we are still young so that we can build up for ourselves a stream of passive income for the future (according to OCBC Financial Wellness Index, about 48 per cent of Singaporeans do not have passive income).
- Making a conscious choice to buy a less expensive HDB flat, perhaps even securing a flat which is nearer to where our parents live so that it's easier for them to help us when we have children.
- Testing ourselves by living on one person's income, so that we know there is a viable option to live on a single income as a family in the future if the need arises.
ACTIONABLE ITEM 4: MAKE YOUR SPOUSE (AND YOUR PARENTS) YOUR BIGGEST ALLY
If you are planning what you need to do for the family without the support of your spouse, you are going to be in for a rough ride. You should make decisions together, and not separately.
For example, if you have kids and both you and your spouse are working, you need to discuss and decide who should be taking childcare or urgent leave whenever your little one is ill and not able to go to school or childcare.
These seemingly easy questions are not that straightforward, since any decision you make would affect the other person and his/her work. So, discuss and if need be, take turns on who should take 2 or 3 days off work whenever it's required. The last thing you want is to be caught between your parents and children, as well as between your career and spouse.
If you are getting your parents involved, be mindful about the dual role that they play as both caregiver, and loving grandparents. Many arguments between adult children and their parents start because of disagreements over how a child should be cared for, how they should be brought up and what they should be doing or not doing.
ACTION ITEM 5: STRIVE TOWARDS WORK-LIFE INTEGRATION
If time, energy, health and money permits, many of us who are in the peak of our career today would strive to be the best parents we could be at home, filial children to our parents and great colleagues and bosses at our office.
However, we live in the real world where we are limited by these constraints. We may wish to spend more time with our children but are physically drained by the end of each working day. Alternatively, we may wish to stay late in the office to be with our team as we prepare for an important presentation but have parental responsibilities that we need to handle at home.
Like it or not, your career and the people that you work with on a daily basis can (but shouldn't) impact your state of mind and how you feel about both your work and your family. More so than in the past, being able to handle work-life integration is going to be important for us.
Having supportive colleagues and bosses around us is important. If you do not have that, you are going to feel "sandwiched" between your career and your family. So, strive towards work-life integration, or find a company that is able to support you in this important endeavour.
JUST LIKE OUR HEALTH, WE SHOULD MAKE GRADUAL IMPROVEMENTS FOR OUR FINANCIAL WELLNESS
Regardless of our current financial health today, we can always find ways to start making improvements for our own financial well-being. Financial wellness, just like our own health, isn't something where drastic changes can be made overnight, and results will show immediately.
If we have unsecured debts which are currently incurring high interest, we should make it a point to clear them as soon as possible. If we already started investing but are not confident of our investments doing well, we can make it a point to learn more about the investing world, to make better investment decisions for ourselves.
That's the beauty of it. No matter how well (or how badly) you think your current financial state is, there is always something you can do to improve yourself.
This article was first published in Dollars and Sense.