Wah… 5-figure monthly salary and still struggling…

By February 14, 2018Current

TL;DR – Then what about the rest of us?

It’s Budget season here. As expected, there will be many people asking for the government to do more for them.

The New Paper (TNP) carried an article yesterday where a middle-income Lee family (no… not that Lee family) and what they hope the Budget can help them with.

As I read the article, I got a bit… perplexed. And then troubled.

Via Facebook

Many netizens feel the same, and flocked to TNP’s Facebook post and also the various media sites that carried this news to express their views. Guess the flaming and trolling got so bad that the article had to be taken down.

Here’s part of the article that covered the family’s story.

Ms Serene Lee, 37, said that despite her husband’s five-figure monthly income, a family the size of hers still struggles to make ends meet.

With her three children being of varied ages – one in primary school, one in secondary school and one in a polytechnic – Ms Lee said her part-time salary and her husband’s pay have been spread thin.

To add to her list of financial burdens, Ms Lee recently had a heart transplant.

Among other things, she requires expensive immunosuppressants. She has to take a $50 pill every day for the rest of her life.

Even after insurance and financial support, her medication still costs more than $1,000 for six months.

She said: “While it might look from the outside like we have a more-than-comfortable income, the cost of medication, looking after a family of six and other daily costs adds up.” They employ a maid and that adds to their monthly expenditure.

There is the estimated $1,800 a semester for her son’s polytechnic education and the additional cost her daughter incurs from her co-curricular activity (CCA) of sailing.

Ms Lee said: “It is those of middle income like me who are suffering.”

She explained that because her family monthly income exceeds the maximum income under which they would qualify for financial assistance schemes, they usually get little help.

While help for large families is available based on per capita income, a family with a helper will have an additional dependent that does not fall under the headcount.

Ms Lee hopes for announcements in Budget 2018 that could ease the stress on her family.

Ms Lee’s Budget wish list includes an additional Edusave allowance for her children, subsidies for larger families and a higher income cap for financial assistance.

Secondary school students get $390 a year for Edusave.

Ms Lee said her daughter’s sailing CCA alone costs anything between $300 and $400 a year.

She said: “Specific sports CCAs cost more, and as parents we want to support our kid’s interests too, and if the school offers it, then cost should not be a barrier.”

Ms Lee is also hoping for more help for her youngest daughter, who has some difficulty keeping up with her classmates in primary school.

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Private tuition is an extra cost that could be avoided if younger children could access more help at school, Ms Lee said.

She said: “There are many middle-income families like us who are suffering despite seeming to make enough.

“After deducting Central Provident Fund, bills, medical expenses, education fees… there really is little left.”

Source: HWZ

 

The Lee family situation

Ms Lee’s husband earns a five-figure monthly income. Ms Lee works part time. The article says that this family’s income “has been spread thin”. That’s a bit… shocking.

A five-figure monthly salary is at least $10,000 a month. And Ms Lee works part time. So let’s say the total monthly household income of the Lee family is $11,000. According to government statistics, the Lee family earns more than 64% of households in Singapore.

So if such a family thinks that their income has been spread thin, then what about the 64% of households in Singapore who earn less than them?

Ah. But the Lee family has some additional challenges. Ms Lee recently had a heart transplant. As a result, she needs expensive immunosuppressants. She has to take a $50 pill every day for the rest of her life. With insurance and other financial assistance, her medication costs come up to $1,000 for six months.

There are also three kids. The eldest is in Polytechnic. The fees for polytechnic is $1,800 for six months. The second kid is in secondary school. Her CCA is sailing, which costs about $300 to $400 a year. The youngest has some difficulty keeping up in school. So perhaps she’s getting private tuition.

via Facebook

The Lee family also has a maid.

So, with all those expenses, and deducting for CPF, the family has “really little left”. That’s why Ms Lee hopes that the government can do more. Her budget wish list includes an additional Edusave allowance for her children, subsidies for larger families and a higher income cap for financial assistance.

Are they “needs”, or “wants”?

Like many netizens who have commented, I feel that this family should be very clear what is a “need” and what is a “want”.

Medication to stay alive is clearly a need. Paying for school fees for polytechnic is probably a need.

But what about the maid? Is that really a need? I mean… instead of paying for a maid, the children can help out around the house, right?

What about that CCA? Surely we should do everything we can to support the interests and aspirations of our children? Yes. True. And if the parents really want to support the child in that very expensive CCA, then they should be prepared to make the sacrifices.

Sure. There’s something to be said about investing to train promising young athletes so that they can represent Singapore on the international stage. So if the kid really shows great promise, then the government should fund her training. But that doesn’t mean  the parents don’t have to make any sacrifices at all.

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Spending to help fulfil “wants” mean less to help meet “needs”

Some would say that we are in no position to judge this family. They say that it’s elitist to judge this family. Why should only the rich be allowed to afford to fulfil the aspirations of their children?

But the reality is that we have finite resources, but our wants are infinite. So every cent we use to pay for something means we have one cent less to pay for something else.

If the government spends money on paying for sailing for the Lee family’s second child, that’s $300 or $400 less that for schemes like KidSTART that help children who are from truly poor families. Are we really ok with that?

So it’s not to say that we can’t give more to families like this Lee family. But we have to be very aware that in doing so, it means that we will have less to spend on other areas. We have to consciously make that tradeoff. And because it’s public funds, we all have the right to comment.

And know what? We all should know that resources are always limited, and unless we want taxes to go up so much to cover the dreams and aspirations of every child, then we should understand the economics of optimal allocation of resources. In fact, a government’s role is really about redistributing resources through policies that benefit the majority of the people, and to ensure everyone has an equal shot in life. And it’s about prioritizing.

Ask me if I would take away sailing lessons for Child A to put food on the table for Child B, or to let Child C go to school, I’d say ‘yes’ in a heartbeat. Besides, I am sure we have all been deprived of something at some points in our lives. No sailing lessons now doesn’t mean no sailing lessons forever. I know of a married couple in their 30s and with two young children who have just taken up sailing lessons together. Hey, life is a journey, we don’t have to do everything all at once, you know.

Personally, I hope that each of us will do as much as we can so that we can take as little as possible from public funds. If can don’t take from the government, then don’t take. Because there are those who, despite their best effort, really need help from the government. And they should be the ones who get the most, right?

Having said that, the truth is the government won’t just give everything to the poor. In Singapore, everyone benefits to varying degree from the Budget. All Singaporeans enjoy highly subsidised education. And we all benefit from many high quality essential services (our roads, security provided by the police, etc etc). And we all get some Medisave, Edusave top-ups, GST rebates, U-Save, here and there, now and then.

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I heard someone say this today, the annual Budget is not just about goodies for the people. It’s actually a national plan for the country, for the people.

Got to decide on the trade-offs carefully!

So. While we would surely all love to get more from the government, let’s bear in mind that we are already getting some things, and whatever more we get means that we are spending less elsewhere. Another thing to remember is this, even if we didn’t get something this year’s Budget announcement, we might have gotten something from last year’s Budget announcement.

There are also different challenges that we face each and every year. For instance, there is the rising terrorism threat for defence and the Mindef may need to channel more funds to cope with this. Another example is education. What used to be more straightforward education policies for the school-going children and youths have now evolved and expanded into the additional areas of continuous and lifelong learning for adults.

Every ministry and every new or improved activity or programme will need more resources. But who will pay for them? Don’t forget that majority of working Singaporeans don’t even pay income taxes. so how to fund these expenditures?

At the end of the day, we will need to make trade-offs.

Come Monday, when Minister Heng Swee Keat delivers his Budget speech, we’ll know what trade-offs we are making. If we get the trade-offs right and are able to get the biggest bang for our buck, then our economy can grow, and our lives can be improved, not just today, but for generations to come.

Minister Heng summed it up quite nicely,

“It is about making a long-term plan to allocate resources for the country’s future needs, and there are “important questions” to ask, such as why revenue is collected, and how and why is it spent. “And are we planning for the long haul? Are we planning for a better Singapore? That is the issue I think we ought to concentrate on.”

 

(Updated 17th Feb, 6:30PM) We published a follow-up article on the mean and median household income in Singapore for the year 2017, and also covered economist Donald Low’s two Facebook posts on this story. Read here.
 

 

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Jake Koh

Author Jake Koh

Recovering sushi addict, I'm a man of mystery and power, whose power is exceeded only by his mystery.

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