Any financial planning tips for a young adult, married with a kid and have to pay for my BTO?

Hi! I'm 26 this year, worked for 3 years, married 3 years (my hubby is 32 & has worked for 7 years) and have a 2 year old girl. We don't really have a lot of savings as we got married, got a BTO & renovated 3 years ago shortly after having our girl 2 years ago. How can I start my financial planning with my hubby for our future and our kid? We have to finance our flat solely on CPF. We still have excess every month so we did a partial prepayment of the HDB loan ($30k). Is this wise to do?

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Loh Tat Tian

13 Sep 2019

Founder at PolicyWoke (We Buy Insurance Policies)

Plan in totality.

You need to plan for everything.

1 Talk to each other first. Understand what is the common goal you two want to achieve.

2 Know your asset, liability and expenses.

3 Work on your cashflow

4 explore ways to get tax savings (if there is a possibility), especially if your husband hits 11.5% tax rate (to bring the tax bracket to 7%)

My answer would be complicated since I will strategise as a wholesome plan instead of bite-size tips.

BTO financing through CPF OA is ok. As long as your remaining cash is generating higher interest than 2.5%. Keep about 1 to 2 years of CPF OA payment to buffer for job loss etc.

Transfer the rest either to SA, or invest (depending on your risk profile). Once you have reached FRS (full retirement sum) and BHS (basic health care sum), the additional amount will flow to OA. You can use that to partial pay the BTO. Accrued interest is not a problem as long as you have FRS.

If you want a detailed analysis, do contact me [email protected]

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Clarence Chua

26 Jul 2019

Financial Planning Specialist at Prudential Assurance Singapore

Hey Anon,

Its alright if you are financing your flat solely on CPF for now. Address one area at a time, in the future when your cash flow allows, you can always review your financial situation and work from there.

It’s okay not to have a lot of savings for now, but make sure it is growing every month, set aside 20% of income and split them into different instruments. Add another 5% for your child’s education planning.
If you do not have 6 months of income as emergency fund, make sure to work towards it too.

Communication and clarity will a good first step towards financial planning. Talk to your husband and be clear of what each individual is aiming for and as a couple what are your goals.

Speak to your advisor and have a professional opinion.
If I can sum up, as a very basic guide, just ensure 10% of income goes into wealth protection (insurances), another 20% into savings, you can put them into different instrument. 5% towards your baby girl education. 😊

Try to keep expenses to about 50-60% of income.
speak to an advisor to get professional advice too.

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