5 Money Tips Fresh Graduates in Singapore Need to Know


Article Author - Shawn Lee
By Shawn Lee
May 16, 2016

Shawn Lee
Congratulations on your graduation! You have completed almost 2 decades of formal schooling. I savored the time when I graduated, I was on my own to forge my own path ahead.

Receiving my first full-time pay was exciting but the excitement faded as quickly as it came. Financial responsibilities of planning for my wedding, a home and kids soon came my way.

As a young graduate, you are required to make your most important financial decisions at still a young age.

I wish I knew these money tips before I started working.  


1. Budget

The only way to not get into debt is to spend less than what we earn. Budgeting is so important yet often neglected by most of us.

Useful hacks:
  1. Budget your monthly salary into four areas: monthly expenses, savings (eg. wedding, renovation), emergency fund, spare cash (ad-hoc expenses)
  2. Account sufficiently for ad-hoc expenses. It could be the ad-hoc birthday treat that came up, an unexpected taxi ride or a course that you want to sign up for.
  3. Do not stretch yourself too thin and do not spend more than what you have budgeted for.

2. Automate Banking Accounts

This ensures that we stick to our budget.
With new bank accounts (Eg. OCBC 360 and UOB One) that give us higher interest by depositing our salary and making a minimum spending from the same place, we are given incentives to save and spend all from the same account.
This could lead to overspending and we could be better off not earning from this extra interest.

Useful hacks:
  1. Setup four bank accounts for the four areas you have budgeted for
  2. Direct your salary into one account and set an automated transfer on when your salary is credited each month to the other 3 other accounts.
  3. Ensure that you do not have any ATM, debit or credit card access to your savings emergency fund bank accounts. It was so easy for me to touch these accounts when I had access to them!

3. Savings

This account allows me to save up for big-ticket items that are coming up. Even if you are single now, it is important to save. You should be financially prepared when the love of your life appears!

Useful info:
  1. A wedding in Singapore is more costly than what most people think. One couple in Singapore had a dream $110k wedding and ended up in severe debt. An entire wedding celebration with a banquet at a hotel can easily come up to at least $40,000. Remember that A Wedding is a Day; Marriage is a Lifetime.
  2. The average amount spent on renovations is $56,000 in 2014. Together with your wedding celebration, this is a large sum of cash to save up for.
  3. If you are looking to purchase a car, you would need to set aside at least 40% of the purchase price in cash. A new Chery J3 requires a deposit of at least $30,000.

4. Emergency Funds

Many people underestimate the value of having emergency funds set aside. We need extra funds to tap on for an unexpected medical expenses of a loved one and to tide over in the event of a retrenchment.

Useful hacks:
  1. A good guide is to save up 6 months of your monthly salary so that there is enough to tap on in an unexpected event.
  2. Consider setting a portion of your emergency funds in Singapore Savings Bonds by the Singapore Government.  Aim to grow your emergency fund as your salary increases.

5. Insurance

This allows me to provide for my loved ones who are dependent on me financially. In the event of an illness or a disability, I will not be a financial burden to anyone.

Useful hacks:
  • Use term insurance to adequately insure yourself. Most of us do not need insurance for our entire lives, our dependents would no longer be dependent on us financially at a later point in our lives.
  • Always compare products from the different insurers, the price differences between the different companies are much greater than what you expect.
  • Ask your insurance advisor how he/she is being remunerated. Does your advisor earn more by selling you one product over another?

Investments?

While the world of investing and possibility of high returns seem exciting, it is critical that you do not dive into them until you have the above five financial areas planned for. Investing is for long-term and we should only invest if we have spare funds that we do not need for 10 years to ride the market volatility.

By implementing the above money hacks and if you are debt-free, you would have started off on a sound financial footing.

The journey to financial independence is a marathon and not a 100m dash. Plan well and you have won half the battle!


The edited version appeared in The Straits Times on 15th May 2016.



To read more content like this, subscribe to our mailing list.

DIYInsurance (Do It Your-way Insurance) is Singapore's First Life Insurance Comparison Web Portal started in June 2014 by Providend Ltd to empower people to make informed decisions about their own insurance purchases. In addition to ongoing promotions, we rebate 50% of the agent’s commissions back to our clients so that they enjoy greater cost savings.


The Trusted Place to be Insured

MAS-licensed since 2003 | Expert advisers to assist you | Advisers not commission-based | Dedicated after-sales service | Secure and easy process


Like this article? Don't forget to share.


Term or Whole Life?

A Comprehensive Consumer Guide to Life Insurance

The Case of Term vs Whole Life Insurance eBook
Learn about:
  • What types of insurance do you really need?
  • How should you plan for your insurance?
  • How long do you need coverage for?
  • How much insurance do you need?
Please provide Name
Please provide Email Please provide Valid Email
Need Help?

Chat with us. We will answer your insurance questions!

Live Chat

Call Us
Call Icon

(65) 6309 2478

Add New Comment

Go ahead and ask our non-commissions based planners!

Speak to us online

Live Chat

Call us on our hotline

6309 2478

Let us contact you

Send a message

Top