Budgeting is not just for working adults

By Bertha Henson

ILLUSTRATION: LORAINE LEE/ SCREENGRAB: BUDGET 2018

I tell people that there are only two important speeches in a year that they should heed: the Prime Minister’s National Day Rally speech and the Finance Minister’s Budget Statement. The first is, of course, sexier and more all-encompassing and takes place on Sunday evenings when people can catch the “live’’ telecast. The second, however, is on a weekday when people are in the middle of work or school. It’s today at 3pm.

For non-working people (read: students), it’s just another long boring speech from a politician. My students on this project would rather be doing something else if they haven’t been ordered to watch what Deputy Prime Minister and Finance Minister Heng Swee Keat has to say about the economy. As far as young people are concerned, these are matters for their elders to worry about — unless their elders make an attempt to bring the young ones into the picture or they actively seek information.

This is what I have found interesting. Too many parents want to shelter their children from the realities of life. They do not want their children to know how hard they have to work or whether money is tight. They just want their children to study hard and get a good job later.

This comes through in the students’ articles reflecting on issues that they would have to confront only when they start work. There was this article by Christalle who spoke to her parents about why they had moved house over the years, and another by Shiying who steeled herself to ask her parents if they had enough put by for retirement.

Young people get shaken out of their comfort zones when they have to deal with real-life issues. Now, their only concern would be grades and getting a “good’’ job. This is probably what most parents tell their children too: “No need to worry. Just study hard’’. Only when they are plunged into the workplace will they have to deal with “what is CPF?’’ and whether the company gives medical benefits. Adult issues. And because they are so unprepared, they will probably just look at salary, vacation time and working hours. Maybe they will also look at the company’s corporate social responsibility position, because from what I can tell, most are very “into’’ climate change.

What’s worse: If their initiation into financial adulthood comes only when the household suffers a drastic setback in finances. Then they see it in the worries on their parents’ brow and the smaller size of their own pocket money.

Today’s Budget statement is being delivered in disconcerting times. I wonder how many drafts of the speech have been thrown into the bin because the Covid-19 virus threw a curveball into the plans of the Finance ministry. Predictions for the economy have just been downgraded with warnings of a possible recession. Economists are already toting up numbers for a relief package which they say should be at least $500 million or twice the amount set out for Sars in 2003. Every day, we read about different sectors in trouble because of declining visitor numbers. Foreigners are avoiding Singapore like, well, the plague.

I tell young people they should read the Budget statement even in normal times because it will affect their parents, and also make them more aware of the financial responsibilities that a household has to bear. Singapore is in the middle of a re-skilling, re-structuring exercise because old methods of doing business are no longer good enough to face global competition. It is also trying to find ways to raise money, and to be aware that whatever taxing and spending that happens today will affect them some time later, especially if they have to carry the burden of caring for the elderly. You can read our feature on the GST here.

A few days ago, I saw how my group of students gulped when an economist told them they would belong immediately to the bracket of people who have to pay income tax. They would be earning graduate pay, after all, which would put them beyond the $22,000 a year threshold for tax. I don’t think the word “tax’’ ever featured in their job-hunting exercise, even if it’s just in the head.

For today’s Budget, I tell them it is going to be “big’’, especially if their parents are in the tourism or hospitality industry or in businesses reliant on foreign manpower. And if they are graduating this year, there’s all the more reason to keep up to date with what is happening on the job creation front. I mean, they can’t be silly enough to try for a job in an industry at the brink of retrenching staff — unless the measures are so generous as to tide the industry over for a long time. I know of many soon-to-be graduates who are afraid of what the job market will be like for them — but probably don’t see what a long, boring speech has to do with helping them make better decisions.

The Finance ministry tried to interest young people in the Budget a few years ago by using social influencers. It was a lame attempt but it was at least an attempt. It would be far better for the ministry to get rid of financial jargon, and to be clearer about trade-offs when it decides on what to tax or spend on.

The better approach, really, is for parents to let their children in on how the news on the Budget affects the household and do some information sharing. An income taxpayer can surely answer questions on personal relief. A person running a household should be able to explain the components of the water bill (or maybe I am wrong) or why the family doesn’t need to pay service and conservancy fees in some months.

I wager that parents would be more circumspect when speaking to their children about finances rather than resort to the usual ranting and raving about “too little, too late’’. Everybody has an opinion when it comes to money and it is usually “not enough’’. But when it comes to explaining things to the next generation, you can bet that a more informed and rational hat would be placed on the head — and that would be good for both young and old.