I did an earlier post on "What if I woke up from my Dream" on what first steps I would do to get out of a low income situation. Today I will list out other methods which I think people can utilize to move up to a better financial situation. Some decisions might not be easy. There will definitely be some sacrifices. I will not be repeating on the same ideas as the previous post but other points which I have thought of previously.
Personally, I believe in Singapore, there are a lot of opportunities for a lower income to upgrade into the next level. But first the families need to make some sacrifices and trade offs to slowly climb up or out of their predicament. There is no free lunch.
Firstly as I've mentioned in my guest post, communication is very important. The discussion about existing financial situation needs to be done. Everyone in the family needs to know how good/bad the situation is, the decisions that have to be made, and what each of them can/should do to move the family out of this situation. Everyone has a part to play. Parents or children. My scenarios are based on a family of parents and 1-2 children with some/minimal influence of grandparents. I will also assume that the grandparents are relatively healthy and in no immediate need for medical services.
One particularly important thing is to learn about finances. Some folks might not know about interest, budgeting, expenses, etc. I think the government is already starting to put financial education into schools and this will help youths to better educate themselves on how to better plan and account for their finances.
Next is economies of scale. By planning fiances with your family, you can potentially get family plans. Like handphone lines for the whole family can be obtained with a discount. Asking what the family likes to eat and are willing to eat for the week so as to plan what to cook or buy in bulk.
Signing on as a Regular. This means pursuing a military career. Agreed it's not the best of jobs. But I think that if your family is not in a good financial situation, to sign on will really put your finances in order. Pay isn't great. But most expenses are already paid for. Medical expenses are free. Food and lodging is readily available. For instance, a son can sign up as a regular and stay in camp. The family then can rent out a room in their house. This is a double source of income. Yes there is some loss of privacy but sacrifices have to be made. The son would save a lot by eating in camp as it is free. The family would have a secondary source of income to help pay off the mortgage or with the living expenses.
One thing I don't understand is why someone would work for minimal pay. Example, cleaners, fast food delivery, etc. Please note, I am not looking down on them. They do provide a service which is essential for the convenience of all of us. What I'm saying is that I don't understand why they would accept such low compensation when there are other alternatives around. A bus driver would be able to earn about SGD3k per month. Instead of being a sales assistant in a small outlet earning SGD1200 per month, one could gain sales experience and move on to higher networth sales, like jewelry, luxury watches, etc, where the pay would be higher. Definitely it would be harder work but that's the point. To work harder to get your family out of the low income situation.
Even a waiter can have a lucrative career path. After gaining experience, they could continue to move on to more luxurious establishments where the pay is higher. Naturally, they would need to have a good attitude and provide really good service. They could also be promoted to Captain where they would supervise the other new waiters. There are people from Hong Kong coming to Singapore to fulfill this role of Service Captains. If the pay wasn't good, why would they come all the way here.
When I was doing financial sales and trying to persuade a cleaner to purchase a whole life policy or endowment policy, she said she had no money. Not even SGD50 per month to save in an endowment policy. The next week when I met her, she showed me her new SGD3k diamond ring. She was willing to spend SGD3k for a diamond ring but not willing to save SGD50 per month for her future. I know of young auditors who look forward to their increments and bonuses every year. They are young and impressionable. They also like to compare. During their periods of high financial ability, they take it as a good season to update their wardrobe, handbags, shoes. I've always wondered how it was like to spend SGD2k on a product without blinking an eyelid. (Then again, I own a car... No excuses. It's an unnecessary expense.)
Another income generating hobby is to set up a flea market. It doesn't take much to set up one. Buy cheap products from overseas and sell them at a flea market. Simple. Anyone can do it. I've started taking a liking to doing this actually. I get to spend time with my wife at the flea market and it's a simple income generating activity. The set up cost isn't particularly high and if you bring in relatively sell-able stuff, there should be no problems covering the cost and making a profit for the day.
Spoiling your kids is also a big culprit to staying low income. Some parents may "help" the child keep with the times by buying them the iPad or iPhone so that they can keep up with their friends. They think it is a small expense. And in reality, it is a small expense. However, multiple small expenses would accumulate to a large expense. Bringing your kids out to eat every weekend at posh places, piano lessons, etc. These are not a luxury which is open to a low income family. As I said. I am in no way looking down on others. It's just that. These things should not be considered at this point. Options are open when finances stabilize and the family can pursue other interests when that happens. A life of living hand to mouth and struggling with monthly expenses is not the way to live.
Agreed that I have started life in a good footing. However, I do not think that others are any worse off. There are many options for improvement and decisions and sacrifices have to be made. Although I earn enough, I do not spend a lot. I save most of my income. Even I have made or am making sacrifices to improve my life as well. It is not as though my goal of early retirement comes for free. I do not even consider it a sacrifice not to spend as, I have either gotten used to spending less, or, the trade off is so small considering what I hope to get back in future that I do not deem it a sacrifice.
In Singapore, there are many opportunities, it only matters how you reach out to get them. They will never just land on your lap if you just sit around at home all day. The cost of living is increasing in Singapore as well. This is just part of the game and will have to be accounted for during the planning. The raising cost of living is also making it harder for me to retire young. But, I'm not going to complain about it. I'll just have to adjust my plans to work around it and I think this should go the same for everyone else. Yes, you can comment and hope that the government takes measures to ease the situation. But that should just be hope. The main thing that can be controlled is how you handle the situation and work around it.
How about you? Have you seen/noticed poor decision making around you? If they can afford it, that is fine. Can you think of times when you have seen someone who cannot afford it and still made a foolish decision? Or complained without doing anything about it themselves?