So one of the biggest news yesterday was the announcement of the annual bonus for civil servants.

If you have not read it, basically, according to the Public Service Division, most civil servants will get a year-end bonus of 0.1 month this year, with a one-off lump sum payment of S$250 to S$1,500.

Of course, there were a lot of unhappiness aired by Singaporeans, especially those in the civil sector. Mrs Budget is also part of the civil service. 

Is 0.1 month bonus very low? Well yes, if you look at the historical annual bonuses for civil servants over the past few years.

Dr Wealth did a very handy bar graph to help visualise this:

Here’s what the graph show:

1. 2019 bonus of 0.55 months has been the second lowest payout in the last 14 years.
2. The lowest payout was in 2009, in the aftermath of the financial crisis, at 0.25. It was the only time in the last 14 years that no mid-year bonus was given.
3. The highest bonus given is 1.7 months. 
4. Following a low annual bonus, the year after will usually see at least a 1.5 months of annual bonus (year 2010, 2013, 2017).

According to an internal note to public officers that was made available to the media, Trade and Industry Minister Chan Chun Sing said that the economic performance this year has been weak, and the economic outlook remains uncertain and challenging with downside risks.

What that means is that, going into 2020, economy will continue to be sluggish and with the global trade war still ongoing, things are not going to go up anytime soon.

What Can And Should We Do

So instead of complaining, or after we complain about the decrease in bonus, what we should be doing is to make sure we prepare adequately in case of a recession mid late next year.

For Mr and Mrs Budget, we will be looking to trim down on our monthly expenses, as well as revoking into our financial commitments. This means that we should cut down on food delivery, and cook more often at home. Entertainment cost is also an area we need to cut down on.

Also Read: November 2019 Monthly Expenses Update

Mr Budget also has a high monthly mortgage commitment, and that is something that is constantly weighing him down. So we will have to see if there are ways to go around that. 

Other than relooking our finances and be more prudent, perhaps more importantly, is to make sure that we increase our cash holdings which serves as our war chest to be deployed when there are any stock opportunities. 

Currently for Mr Budget, his cash holdings is a bit on the low side, as most of it is invested out into the market. What he will be doing for the next year is to increase his cash and cash equivalent, and continue to contribute to his CPF.

Based on a simple projection, if he did not put any more stocks and just save up his cash from his salary, by end of next year, his cash holding should be between 30% – 35%. His pension fund should swell to 38%. 

Note to self: Please don’t buy anymore stocks in 2020 unless they are absolutely attractive. 

For Mrs Budget, she is currently overweight in her CPF, with half of her current net worth (minus properties) consisting of her CPF. What she will be doing next year is to continue to pile up on the cash and can be slightly more aggressive in scouting for investments to spread out her portfolio more. 

Based on a simple projection, if she buy S$6000 of stocks and save the rest of her salary, by end of next year, her cash holding should be around 30%, while maintaining a 48% CPF portfolio and a 12% SG stock portfolio.

Hopefully we can stay on this path towards increasing our cash % holding. 

For those getting more than 0.1 month of bonus, please save up, because winter might be coming! The government usually knows more than we do!

If you are in the private sector, how much bonus are you expecting to receive?

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