I have held back from writing about this recent development in my professional life because it’s quite personal and I wasn’t sure how useful it would be on this blog. But I figured a change in jobs is a significant event because it can have an immediate and long-term impact on your salary income. Which makes this a personal finance topic.

Newsflash: I will be resigning from my current position in an accounting firm and taking up a new position in a bank. This means I’m finally joining my wife in the banking industry, which is something I never imagined doing.

I have always believed in employment risk diversification to reduce the possibility of both my wife and I being retrenched at the same time. Working in different fields and industries is a good way to achieve that. Protecting at least one source of salary income is a high priority for us to be able to navigate an economic downturn and recession.

So why have I gone against my risk diversification philosophy? I have considered all these factors that led to my decision and figured it would be a good reference point to check back on after working in my new job. Just to see how they played out.

1. Is the salary income higher?

I always knew salary incomes in the accounting industry are lower than those in the banking industry. And I could justify that by convincing myself that my technical skills and knowledge will increase at a faster pace. At some point in time, I will be able to catch up on the gap in the salary income and make up for it. Besides, I figured there was more room and scope for professional development in an accounting firm.

I have come to realise that this is not entirely true. I can say this because my wife and I entered into the banking and accounting industries respectively with similar academic qualifications, achieved the same professional qualifications and our career paths have diverted.

It’s true that I picked up compliance and advisory technical skills and knowledge in an accounting firm. But my wife has also picked up specialist skills and knowledge in a bank. Neither is less valuable than the other. However, a lower starting salary and slower increase in salary due to a fixed promotion ladder has resulted in an ever increasing gap with my wife’s salary.

I’m happy to have a wife that out earns me and I don’t understand why society views it as an issue to be discussed. I could go on and on about the benefits of a higher earning wife but that’s not the point of this post. What’s important is that I start pulling my weight to address this salary gap. Not just for my wife but for myself as well.

I agree that money should not be the most important factor in a job. But it is one of the main employee motivation factors for me. The fact that I can be paid 15% more by making a lateral move from an accounting firm to a bank makes me wonder how much my lost earnings are from not having done so earlier.

2. What about the current job crisis in the banking industry?

This is a good question posed by my colleagues. Why move to the banking industry that is currently going through a job crisis with increasing retrenchment statistics? The problem for me is revenues are already declining in my current team and will eventually cause a restructure. I might as well deal with that problem now and move to an external role with demand for my skills and knowledge.

This actually answers the question above. It depends on which area of the bank I am moving to. If that division is in decline, I am going to run into the same issues eventually. However, if it’s in a growing area such as regulatory compliance, there’s potential for longer-term application of my expertise.

3. Would my professional development plateau?

I will admit that my professional development might stagnate. But it’s very much up to me to decide whether that happens. The work environment in an accounting firm pushes you to learn but you have to push yourself to learn in a bank. It’s easy to keep doing what you are doing and not pick up new skills and knowledge.

In short, there will be a greater learning inertia at a bank but I have to be active in overcoming it. Besides, failing to do will probably result in retrenchment so I might as well give it my all.

4. How does this fit into my personal finance goals?

One of my biggest weaknesses personally and professionally is that I get bored with what I’m doing quickly. This translates into me starting something and never finishing it properly. As you can imagine, doing that in your career can have disastrous consequences.

I have done my best to alleviate this by working in different aspects of the same field to keep myself interested in the job. But all these moving and jumping around in my job history will cost me in the long run for my career. Something my colleagues have made sure to point out to me.

This is what I have to say. Screw it. I only have one life and I’m going to learn as much as I can about as many things as I can until I find something that really fires me up. Actually, I might already have.

As a couple, our ability to generate salary income has contributed greatly to the growth in our asset portfolio. However, lifestyle inflation has eaten into our net worth by resulting in a large amount of liabilities.

The more I manage our personal finances on the assets, liabilities, income and expenses, the more I realise there’s so much that I don’t know. This is the case even when I am interested in learning about it. I can only imagine how much steeper the curve is for people who are not interested but still want to improve their personal finances.

I have to believe that what I learn and earn from my jobs will eventually result in me being able to contribute to improving the general personal finance management and education level of people in one form or another. This might result in me not having a traditional career path but I reckon it’s something worth striving for.

I ran into a good friend from my NS days last weekend whom I have not caught up with in a while. I really should make more of an effort to keep in contact with friends especially when it’s so easy to get sucked into your own life of wants and needs. We chatted briefly and will be meeting up for lunch or dinner next week.

However, what we discussed got stuck in my head over the weekend because I never imagined it would have happened to him. He had completed his undergraduate & postgraduate studies overseas and returned to Singapore to work in a small financial services firm around the same time as me.

I found out he had resigned from the firm recently because it failed to pay his salary for 1 month. On top of being jobless and applying for new roles, he has to try and claim back the 1 month of unpaid salary from the firm.

Since he lives at home with his parents, the financial consequences are not severe because his expenses are not high. However, it’s hard enough trying to find a new job in this economy and still attempt to work things out with the previous firm about the 1 month of unpaid salary.

This got me thinking about what resources or avenues do a Professional, Manager and Executive (PMET) have to resolve salary-related claims and how should he even approach this. It’s usually not something we consider until we are in the situation of having to make the claims i.e. got screwed by our employers. What would I do in his situation?

1. Making a claim against an employer on the Ministry of Manpower (MOM) website

First thing, I googled “salary claim employer MOM”. This useful search result on making a claim against an employer comes up on the MOM website. I clicked on the link and one of the first things the webpage says is you need to be covered under the Employment Act to make a claim against your employer.

WTF is the Employment Act? Okay, I’m thinking I should be covered since I work as a PMET in a full-time job. I click on the link to the Employment Act and this catches my eye:

You are not covered if you are employed as a manager or executive with monthly basic salary of more than S$4,500.

OMG. So I’m not covered by the Employment Act. Quick check with my friend and he was earning S$4,800 monthly (slightly above S$4,500) so he’s not covered too. Why in the world is there a threshold of S$4,500? Do these people never have to worry about making salary claims?

2. File claim with the civil courts

I’m stuck now. Can’t seem to find any useful information on these MOM webpages about what happens if you are not covered by the Employment Act and can’t make the claim via MOM. There is something about tripartite mediation for PMEs. Again, you have to be earning a monthly basic salary of up to S$4,500 to be eligible for this. Useless to me or my friend.

I go back to my Google search results and see something about the Employment Claims Tribunal (ECT). In the background provided, it says that the Labour Court currently provides adjudication services to resolve salary-related claims between employers and employees covered under the Employment Act. However, those who are not covered by the Employment Act would have to file their claims with the civil courts, which can be a lengthy and costly process.

WHAT? I have no idea how to file a claim with the civil courts and it sounds expensive. I keep reading the webpage and find out that MOM announced the plans to set up the ECT in 2014. It is to be established as a Tribunal under the State Courts, similar to the Small Claims Tribunal. Did you understand that? I didn’t. Plus it’s been 2 years and the ECT hasn’t been set up yet. You would think this is a high priority item.

I try to find something on the Small Claims Tribunal and the webpage mentions how to file the claim and something about employing mediation extensively in their proceedings. They seem to really like this idea of mediation and I have seen it mentioned so many times. Does it even work?

Even just writing this post is getting me frustrated. Because I seem to be reaching the conclusion that my friend will have to spend quite a bit of time and money to force his ex-employer to do the right thing and pay him the 1 month of salary owed. This is if the mediation fails, which is likely even if he spends a lot of time in the negotiations with his ex-employer.

There is not much I can do other than to offer support, help and my limited knowledge on making a claim against an employer. This post is for you my friend and I hope everything works out.

This topic surfaces at the end of each financial year (30 Jun in my case) when firms start doing performance bonus and salary reviews. We wait for the letter that shows us the monetary value of the additional time & effort we have put into work for the past financial year and our worth for the next financial year.

This is the time where you get a higher than normal movement of staff due to employees resigning and/or changing jobs only after receiving the performance bonus. When I was working in an accounting firm in Australia, we did not receive any performance bonuses. However, my wife did receive annual performance incentive awards while working at a bank.

Upon our return to Singapore, I was pleasantly surprised to find that the accounting firm I was working at pays performance bonuses. Although it was nothing new to my wife, we found it fascinating how much of a phenomenon it is here. Where this topic is not mentioned much among staff and friends in Australia, it is discussed a lot more in Singapore.

At first, I was just happy to receive a monetary incentive at the end of each financial year. Now, it is something I anticipate & plan for and I have no idea whether this is a good or bad thing. It’s not so much that I expect to receive a performance bonus but more to have planning structures around it in place. I will leave the topic of salary increases & negotiations for another day and just focus on performances bonuses for this post.

For the past few years of working in Singapore and Australia, our performance bonuses have averaged at about 1 to 2 months of pay. I’m sure there are many people out there with higher performance bonuses but these are decent amounts to us and sufficient for us to work with. Anyway, here are some of the things we have observed over the years.

1. Don’t do anything stupid that can screw up the entitlement

When you are close to the end of the financial year, don’t do anything stupid. This is not the time to pick fights and have conflicts with senior management. You have the rest of the year to do that.

You will be surprised at how easy it is for them to remove your entitlement to the performance bonus by giving you a bad grade for your performance review. One year of hard work & effort can amount to nothing if a bad incident happens during the last month of the financial year.

2. Don’t resign before receiving your performance bonus

If you resign before or too soon after the end of the financial year, you lose your entitlement to the performance bonus. Even if you hate your job and bosses, hang in there if you are already so close to the end of the financial year. Don’t quit in a fit of anger without thinking ahead.

As a personal anecdote, my brother has made both of the above mistakes before. He was passionate about his job and loved what he did but had tunnel vision and a hot temper at times. The problem is that these issues flared up at the worst times and have cost him financially.

3. Financial planning upon entitlement to performance bonus

Once I know the amount of performance bonus I am entitled to, I start doing my financial planning even before I receive it in my bank account. The reason is simple. I am more clear-headed before receiving the additional sum of money.

Firstly, I allocate a portion of it to cover all of my discretionary and non-discretionary expenses for the next month. This intentionally allows me to save my entire salary for the month, which is how much I would have been getting normally. It’s a reminder that the performance bonus is abnormal income.

Secondly, I allocate a portion of it to my savings & investments. This depends on how my savings & investments have been doing for the past year. I allocate more in a bad year and less in a good year. As long as it is showing an increase, I try not to over allocate since I make regular contributions from my monthly salary.

Thirdly, I top up the emergency fund if we had to tap into it for any reason. The amount allocated is usually small if there had been no significant drain and we still have jobs since the monthly salary can cover for such emergencies.

Fourthly, the remaining portion is for travel spending, especially the long overseas holiday trips that we take after receiving the performance bonus. We dip less into our savings that way and fund a greater portion of the trips using it.

4. Execute financial plan upon receiving performance bonus

I make time for and execute the financial plan the day I receive the performance bonus. It doesn’t linger for a day longer than it has to because I have already made plans to use it all up. I don’t usually celebrate this because it means I had to work hard for the past year to achieve it.

If we reach financial independence and I can work part-time (three-day work week anyone?) just to keep myself engaged but at the loss of the performance bonus, I will take this any day. As grateful and happy as I am to receive it, I will never forget why and what I have sacrificed for my job.