Finance Smiths

Personal finance apprentices-in-training

Our net take home pay per hour

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I was going to write about possibly starting a DBS DigiPortfolio for my wife. Mostly because I saw how a few financial bloggers have written about it at the same time. Might be a collaboration exercise with DBS to promote this financial product using sponsored posts. Which is fine with me since I can see how it benefits both parties.

What surprised me was the negative comments that Brian at A Path to Forever Financial Freedom (3Fs) received on his post about him setting up the DBS DigiPortfolio and not initially disclosing it as a sponsored post. Wow, readers are sensitive about this issue yeah.

Anyway, doing sponsored posts for a financial blogger is a fine line to walk. If you promote a financial product that you don’t use yourself, it’s difficult to convince your readers why they should use it. If you promote a financial product that you use and believe in yourself, it’s difficult to convince your readers why there is no conflict of interest.

This is the reason why I don’t do sponsored posts. I can write what I want about the financial product, both the good & bad. And I don’t have to care what the sponsor thinks about my opinion. I don’t even let ads appear on my blog. The only financial benefit I get is from readers using our referral links to sign up for StashAway and Smartly robo-advisor accounts, which translates into management/platform fee waivers.

Even for that, I struggled with the decision and only went ahead with it this year. Because I concluded there still has to be a bit of monetary benefit for me to keep writing on this blog. I have no intention to make money from this blog yet. Which is why the posts’ topics are narrow and about what my wife and I do with our lives. Not the broad topic kinds that attract more readers.

I have no big dreams of being self-employed or starting my own business in the short term. Maybe not even in the medium term. I like what our corporate jobs offer us for now. Of course, this can change if our roles are restructured or made redundant. For now, it’s important to understand what are we exchanging our time for in the office.

We work in banking middle-office support function jobs (risk management and compliance). We are decently paid with minimal travelling or overtime required. There’s no sales pressure and our colleagues are okay because there’s less competition with each other. The stakeholders we deal with are manageable but can be mean & nasty at times (especially those from the front-office). And we don’t work on weekends.

Sometimes, things can still go badly due to a combination of unfortunate factors like in my previous job. However, it’s possible to move into another bank or financial institution to change your work environment. Which is what I did given that the skill sets are transferable. We expect this to change in the next decade so it’s up to us to keep ourselves relevant.

What comes next is an important exercise that a corporate employee should go through. Calculating our net pay per hour. Then we truly know what and how much we are exchanging our time in the office for. On a weekday, we generally head out at 8.30am and come back at 7.30pm. Which translates into a 11 hour workday on average when you take into account the transport time and don’t exclude the 1 hour lunchtime.

There’s 11 days of public holidays and we have about 25 days of leave in a year i.e. 36 non-working days in total. With 22 workdays in a month, this means we don’t work for 3 of those days on average i.e. 19 workdays. We take our cash salary credited into the bank account (excludes CPF contributions and bonus payments) and deduct the monthly income tax instalment from it. Then we divide the figure by (19*11) to get our net take-home pay per hour.

My wife’s net take-home pay per hour is $50 and my net take-home pay per hour is $30. It’s essential to know this for all kinds of decision making purposes. Like whose job brings home a relatively higher income and should be prioritised & worked around. Spending on convenience and time savings for my wife make more sense when you think about how much shorter it takes for her to earn back the money.

More importantly, it’s how we measure the progress in our careers and its sustainability. The aim is to increase the net take-home pay per hour in proportion to the stress & pressure we face and the risk & responsibilities we take on. It’s more sustainable if this can be a linear relationship, meaning you are paid as much as your value.

Otherwise, it’s not sustainable if you are underpaid or overpaid relative to your value. This is assuming your industry itself is not going through or about to go through a structural decline. Because that just means you are going to be a target for retrenchment since your value goes down regardless of what you do.

If we find ourselves doing more for the same pay, we either ask for a higher pay or move to another job. But we can be worse off with a job move that has a higher pay but has increased working hours in a toxic work environment. We are aware and mindful of our net take-home pay per hour for so many reasons. We even monitor it to ensure that we are not sliding backwards in our career development.

Happy New Year 2017

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It’s the first day of the new year 2017! We had a great time last night having dinner with good friends and counting down at their place. Stayed up late having drinks, playing board games and chatting before heading back in the early hours of the day.

Slept in until the afternoon today and it’s been a lazy day. But we should be heading out soon for another gathering. Always nice to have fun over the long weekend before going back to work!

Anyway, I considered having a post about 2016 in review, where I write about hitting or missing my financial, professional and personal goals. Might do a short summary instead to have a quick look at the past year 2016 but more importantly, to welcome in the new year 2017.

Financial goals (Met all my targets for 2016)

 Net worth: Increased by S$150,000 for the year. Mainly from reduction in mortgage principal, increase in retirement funds & cash savings and investments into a mostly flat Singapore market and trending upwards overseas markets.

ETF portfolio: Increased by S$37,000 for the year. Made investments in overseas ETFs in the first half of the year and Singapore ETFs in the second half of the year.

Share portfolio: Increased by S$33,000 for the year. Averaged down on telecommunication, oil & gas, engineering and financial services stocks.

Other portfolio: Increased by S$31,000 for the year. Mostly from cash savings with some growth in the surrender values of the wholesale life policies.

Total assets: Increased by S$128,000 for the year. In addition to the above additions to the portfolios, growth in retirement funds due to being employed for the full year.

Passive income: Average monthly dividend & interest income of S$1,000 for the year.

Savings rate: Average monthly savings rate of 40% for the year.

 Spending multiple: Increase spending multiple by 1x for the year.

Expenses: Annual expenses of S$120,000 for the year. Shocking and unsustainable. That’s all I have to say.

Professional goals (Change jobs in 2016)

 I changed jobs after having to deal with the conflicts and stress in my previous work environment. Plus my learning curve had plateaued and these push factors triggered my move. I’m doing more interesting stuff and get along better with my colleagues at my new job. But the longer and more intensive hours at work are affecting my personal life.

Personal goals (Overseas travel, exercise & sports and went out more in 2016)

 We enjoyed our trips to Penang, Korea and Italy this year. Will be heading to Bali and US in the first half of next year. Tried to go the gym or for a run at least once each week and went for weekly badminton sessions in the recent months as well. I made an effort to go out more with my wife, our families and friends. Going for such gatherings and meetups is important to my relationship building with them. I have a tendency to isolate myself, which is not good even if I sometimes prefer the company of myself.

Aims for 2017

 I should have a more detailed post about my goals for 2017 eventually. For now, let’s keep it simple. I hope both of us can continue to stay employed this year because that will already allow us to progress further in our financial goals. Most of the cash savings and investments have already been automated and I should only make manual investments when there are significant market dips.

It would be good to gradually lower our expenses as we better manage our spending and time on the various aspects of our lives. We should try to exercise more often or at least lead a more active lifestyle. Finally, I wish for us to be happier, less stressed, more fulfilled & accepting in whatever we choose to do and whatever happens to us this year.

Happy New Year 2017 everyone!

Why I left my previous job

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I don’t think I have ever wrote about why I left my previous job. I mean, I had a post about changing jobs and why I was moving to a job in a bank. But I never went into the triggers at my previous workplace (an accounting firm) that made me decide to search for a new role in the first place.

There were personal as well as professional reasons but they interacted with each other to ultimately result in me resigning. Only my wife is acutely aware of how significant the personal reasons were and I never spoke to anyone about this in detail.

After moving back to Singapore from Australia in 2014, I joined a small tax advisory team in an accounting firm. The team grew in size over time but all of us worked well together. It was a difficult time for me nevertheless because I had to adjust to longer work hours, more demanding bosses and a different work culture.

In early 2016, my tax manager went on maternity leave and I stepped up to cover her responsibilities for several months. Almost burnt myself out in the process but was rewarded with a decent bonus at the annual performance review. However, I wasn’t promoted but I was fine with that since my manager had just returned and I had assumed she will resume her responsibilities.

It’s tough being a working mum in Singapore and I was fully prepared to support her transition back to the workplace. What I was not prepared for was how the relationship between my tax partner and my tax manager will deteriorate to the point where they could no longer work with each other directly.

There were many reasons – mismatched expectations, lack of communication, poor conflict resolution etc. All resulting in a vicious cycle where my tax manager became demotivated, disinterested & resentful and my tax partner became distrustful, small-minded & absent to avoid conflict. Want to guess what happened to me?

 

It’s easy. I got stuck in the middle and I was frustrated & angry that a previously good working relationship was destroyed simply because we couldn’t resolve what I thought was not a hard problem. It’s like watching a train wreck about to happen and you can’t seem to stop it no matter how hard you try.

And that’s what happened. I watched two people that I respected and looked up to become the worst versions of themselves. As a result, we couldn’t win any new client work and our existing client work suffered. So I left. I refused to be a part of a non-functional team where I could no longer learn and felt trapped.

I caught up with an ex-colleague recently over dinner and drinks. Apparently, the situation has worsened and the most likely outcome is that my tax manager will leave at the start of the new year 2017. I was mostly sad at how things turned out but I was a little relieved that I dodged a bullet.

The most important lesson I learned from the whole situation is how essential conflict resolution and communication is to a workplace. It doesn’t matter how technically brilliant, hardworking or even of a teamplayer the people are if they don’t resolve conflicts and communicate effectively.

On a side note, I did consider writing a post about how I could leave my previous job. But I suspected it would end up being about having an emergency fund, cash savings, investments and keeping expenses low. Honestly, it wouldn’t have been true in this case. I already got my current job before resigning from my previous job. It was just a matter of aligning my last day and first day so I got a few weeks of holiday in between.

I didn’t even need to tap into my emergency fund, cash savings and investments. Or even bothered to lower my expenses. One day, I might get retrenched or forced to resign unexpectedly without a job waiting for me. Maybe then will I write a more personal post about the importance of all those things during such an event.

For now, as long as I’m capable and willing to work, my main focus continues to be keeping myself relevant in my industry by being proactive. This allows me to walk away from toxic work environments and that is my best defense against having to tolerate similar unreasonable & negative situations in the future.