How much should I aim to save by 40?

Hi! I'm (30F) trying to plan for savings and I'm wondering what's a good sum to aim for by 40. I've managed to save 100k (cash), purchased CI + ECI + personal accident + hospitalisation insurance. Waiting to cash out endowment in 6 years but that sum goes to my parents' retirement. I think CPF OA should be enough to cover HDB costs at 35 yo. I'm aiming to learn about robo-investing during the CB, but not sure how to set short-term goals. Any advice would be much appreciated, thank you :)

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Al

26 Apr 2020

A definite number is very subjective and vague. A better way to approach this is to aim for a percentage of your after-CPF contribution salary.

20% is a number I shoot for in most instances. Because anything more would usually pose a financial risk and cause financial crunches. A percentage will scale with inflation, your salary increment and move in tandem with your life stage and life style. A hard number will not.

Speak to any of the advisors here and you will get a better understanding on how to manage your risks and wealth projections in the next 10, 15 to 20 years.

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Pang Zhe Liang

25 Apr 2020

Lead of Research & Solutions at Havend Pte Ltd

Cash Flow

Firstly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit.

Here is a Guide:

Understanding Your Personal Cash Flow

Next, create a budget that is capable of helping you to plan for the future. The best way to do this is via automation.

How I do My Budget:

How to create a Monthly Budget

Through understanding your cashflow and by creating a budget, we will save a pre-determined amount, e.g. 20% of income.

For example, if your current income is $10k monthly, then we will save $2k monthly, or $24k annually. At the end of 10 years, you will have saved $240k before interest earned.

Insurance Portfolio Summary

At the same time, one of the most important things to do is to have a complete understanding of your existing insurance portfolio. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies.

Key Reasons Why:

Why Every Client needs an Insurance Policy Summary

Goals

Once we have a complete understanding on our cashflow and insurance portfolio, we can set a goal for your future. As you have mentioned, you wish to own a HDB in 5 years' time. Then let's work towards that goal. In addition to the mortgage, you will also need to set aside money for renovation and maintenance.

Finally, what you need is to spend quality time to do comprehensive life planning for yourself. Alternatively, speak with an experienced consultant to guide you through.

I share quality content on estate planning and financial planning here.

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