The escalating intensity of the COVID-19 outbreak has strained financial markets and curtailed economic growth globally. Many sectors in Singapore have already been affected by the worsening pandemic, and the recently announced COVID-19 circuit breaker measures could amplify the economic impact. During this period, many Singaporean employees could face rising financial stress as they seek to manage their cash flows and meet financial obligations, such as loan repayments and insurance premiums, in the months ahead.
With the closure of non-essential workplaces and schools, these financial worries could compound, translating to diminished work productivity as employees get distracted by their personal financial issues. Before the widespread pandemic disruptions happened, a PwC study previously found that half of all employees distracted by their finances at work end up spending three or more hours each week in the office dealing with such issues. As Singapore grapples with the new circuit breaker measures, these distractions could intensify – right as organisations need the fullest help of their employees to support the company and their customers during this period.
As companies adapt to the new realities of the COVID-19 situation, there is a need to go beyond ensuring the safety of all employees and helping them adjust to work-from-home measures. It is equally important for employers to help employees understand the impact and better manage their finances.
Tips for employees to safeguard their financial well-being
While the Singapore Government has rolled out three support packages totalling $60 billion to help families, employees, and firms cope with the fallout from COVID-19, the full economic repercussions remain unknown. To help weather the financial uncertainty, here are some steps employees can take to help strengthen their financial health.
1: Keep a well-cushioned emergency fund. While the recommendation is usually to keep three to six months’ of take-home pay as cash savings, employees should consider bumping up that amount if they can. Singaporeans will be receiving $600 as part of the government’s Solidarity Budget. As much as possible, this amount should be set aside to help boost cash savings.
2: Review their risk appetite. If your employees have been spending sleepless nights worrying about the stock markets, their portfolios may be at the wrong risk level. Following the stock market gains of 2019, many portfolios could have had a much higher allocation to stocks, and correspondingly, a higher-than-acceptable risk level. For employees unknowingly exposed to more risk they can stomach, a market downturn may cause them to lock in their losses as they panic and sell out.
3: Stick to their contribution plans. In the current market, it may be tempting to stop contributing altogether. But if your employees have already been making steady contributions to their long-term accounts, now is not the time to stop. When it comes to saving and investing for long-term goals like retirement, time in the market is key. In the long run, the contributions accumulated during this period could very well give their retirements a lift.
4: Don’t flee the stock market for cash. Research shows that missing out on just a few best-performing days of the market can impact long-term returns. Exiting the market when stocks tumble is a surefire way of missing out on the initial days or weeks of the market recovery. Waiting to re-enter the markets when the “worst is over” could also mean missing out on some of the recovery. A better strategy is dollar-cost averaging. By investing money into the market at regular intervals, employees can capitalise on lower prices now while avoiding the risk of buying all at once ahead of a dip.
5: Don’t check their accounts too frequently. In times like these, checking their investment accounts too frequently may actually lead to more undue stress and anxiety, and possibly even emotional investment decisions employees may later regret.
Equipping employees with the right financial resources
Resources addressing the aforementioned points and more can boost employees’ financial resilience and well-being, subsequently achieving a positive impact on business outcomes. Whether through webinars on managing finances, online articles or one-on-one virtual meetings with financial well-being advisors, such initiatives can provide employees with easily accessible financial planning advice during this time.
To assist companies in providing their employees with the right financial support and tools, Syfe has launched a library of virtual resources employees can tap on right now. For more information, speak to Syfe to find out how we can help you customise workplace financial wellness programmes in response to the evolving COVID-19 situation.