So you’re fresh out of school and finally joining the workforce. It’s an exciting time as you get to experience new things for the first time, but don’t forget to manage your personal finances in the midst of all that excitement! Wait, what? Personal finance? Isn’t that actual adulting and aren’t you too young for that?
News flash: you’re never too young to start your personal finance journey and the best time to embark on this is when you start becoming responsible for your own money. Not sure where to begin? Read on for some beginner-friendly tips to help you get started.
1. Start saving to grow your wealth
The very first step to managing your finances and building your future empire is this: saving.
With people living longer lives and facing all sorts of unprecedented situations (COVID-19 and climate change, I’m looking at you), it’s always good to start saving earlier so you’ll have a larger stash when the time comes.
Thanks to the future value of money and magic of compounding, what you save today will snowball into a surreal amount many years down the road. You don’t have to be a savvy investor to reap the benefits, all you need is time, and the discipline to save regularly.
Here are some examples of how you can save better:
- Set a budget and track your expenses
To start with, use the 50-30-20 rule as a guiding framework: allocate 50% of your monthly salary to your expenses, 30% for investing, and 20% for saving. Of course if you can afford to save more, that’ll be ideal! Consider using budgeting apps or even an Excel spreadsheet to track your expenses and keep within your means.
- Build an emergency fund
Did you know that two in three working Singaporeans do not have enough savings to sustain themselves for six months of more if they lose their jobs? Things don’t always go to plan and that’s why you need savings – to tide you through unexpected rainy days.
- Set saving goals and keep your accounts separate
Split your savings depending on their goals and consider keeping them in separate places – and away from your spending money – so you don’t accidentally use them for an unintended purpose.
#TiqOurWord Make sure your emergency funds are accessible. Keep them in places like bank accounts, and even insurance savings plans like GIGANTIQ where you can withdraw them anytime and without penalties. (Note: GIGANTIQ is currently fully subscribed, but you can register your interest here for the next tranche!)
2. Get health and life insurance for financial stability
If there’s one thing the pandemic taught us, it’s that anything can happen. Prepare for life’s unexpected surprises with insurance. Specifically health insurance, and life insurance.
The former helps defray the costs of huge medical bills should you end up ill and hospitalised, while the latter helps you tide over the loss of future income if you’re not able to work. Both are important, especially if you have any outstanding debts or if your elderly parents are relying on you financially.
For this reason, the best time to get insurance is when you’re young and healthy. Do it before you develop any conditions or risk having it excluded in your health insurance cover in future. Premiums are also cheaper the younger you are. And in the case of life insurance, your premiums are locked in at the age you first purchase them.
There are also different types of life insurance, with the two popular ones being term and whole life plans. Term life insurance is affordable, and covers you for a specific period, while whole life insurance includes a saving component and covers you for a lifetime but at a much higher premium.
Now that you’ve only just started drawing a salary, consider getting term insurance as it’s cheaper, and use the savings gained to invest instead. Otherwise known as “buy term, invest the rest”, this lets you get the protection you need while freeing up cash for you to start your investment journey.
#TiqOurWord Life protection doesn’t have to be costly. ePROTECT term life offers high coverage between $401,000 to $2 million without breaking your wallet. Apply online from now till 19 November 2021 to enjoy up to 18% off your premium every year, or receive $100 in cashback!
3. Invest early to reap more in the future
Once saving has become a habit and you’ve gotten your insurance settled, consider channelling your excess funds into investments.
The earlier you start, the more time you have to take risks and recover from mistakes. More importantly, the more time you’ll have for your portfolio to grow. You can start small, but early. The later you start, the more you’ll have to put in to make up for lost time.
Having said that, start investing only when you’re ready and in instruments that match your objectives and risk appetite. Do you prefer to invest in safer products like insurance savings plans, or put your eggs in riskier but also higher yield products like digital ILPs?
There’s no right answer when it comes to investing. What’s important is doing your research and deciding on an investment strategy that suits you.
There’s no better time to start than now
The best time to start your personal finance journey is now. The more you procrastinate, the more effort you’ll have to put in later. So why not start now, and reap the benefits earlier?
Information is accurate as at 2 September 2021. This content is for reference only. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This advertisement has not been reviewed by the Monetary Authority of Singapore.
This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). Protected up to specified limits by SDIC. As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid.
Tiq by Etiqa Insurance Pte. Ltd.
A digital insurance channel that embraces changes to provide simple and convenient protection, Tiq’s mission is to make insurance transparent and accessible, inspiring you today to be prepared for life’s surprises and inevitabilities, while empowering you to “Live Unlimited” and take control of your tomorrow.
With a shared vision to change the paradigm of insurance and reshape customer experience, Etiqa created the strong foundation for Tiq. Because life never stops changing, Etiqa never stops progressing. A licensed life and general insurance company registered in the Republic of Singapore and regulated by the Monetary Authority of Singapore, Etiqa is governed by the Insurance Act and has been providing insurance solutions since 1961. It is 69% owned by Maybank, Southeast Asia’s fourth largest banking group, with more than 22 million customers in 20 countries; and 31% owned by Ageas, an international insurance group with 33 million customers across 16 countries.
Discover the full range of Tiq online insurance plans here.