Asked by Anonymous
Asked 3w ago
I'm not well versed in personal financial knowledge and I have been cash strapped for years now. I did some odd jobs before deciding to go back to Uni. I've just graduated, got a job and I'm in a $30k student loan debt.
I've only recently discovered Seedly and been reading up a lot, esp. bank accounts, fixed deposits, investments, etc. I've been using the same POSB e-savings account that I opened in sec school. I'm not dumb but I just haven't been exposed to good financial management.
Would suggest to start by looking at the following items 1st...
Plan/list your monthly expenses to have a clearer picture of where you're spending your money and figure where can you cut down on spendings. This exercise will also better show how much disposable cash u have on hand less the necessary phone bills, student loan repayment ect ect.
2) Start building savings/emergency fund
Start a bank account on higher interest be it dbs/uob/ocbc/boc ect ect. Would suggest to have at least 2-6 months worth of monthly expenses as your safety net first.
3) Chart your career path
Check out various career options which pays better on top of being a good fit for your skillsets/character.
Hitting 30 felt surreal for me, adulting just gets tougher...
See all 3 comments
Keep Hustling! Good job on going back to University and getting a degree. Your first job is just the starting point, keep working hard, upskilling, learning skills that the job market values (and your boss values), and pretty soon, your salary will go up.
If you have time outside of work, find some additional jobs to quickly pay off your student loan.
1) Read up on Savings account. It should be the first thing you do. Eg. UOB1 / Ocbc. Get a higher tier interest. Credit your salary, credit card to pay your bills. However, don't expect much since your stash isn't gonna make much difference.
2)Manage your cash flow. Limit yourself to how much you spend each month. Food/ transport/ parents allowance/ insurance etc. Focus in earning more if possible. Be as kiam as you can but not to point of ppl say you kiam siap.
3)Pay off your debt first. Then save even more. Don't get to eager into investment, your small captal isn't gonna make alot difference , instead read up and build your knowledge base.
No worries, Everyone start somewhere somehow, never too early or late. At least started now.
Suggest you can read up in Seedly home page, under Content for Fresh Grad since your situation is smilar to that.
Where the 30/50/20 allocations with your salary.
So 3k salary less Employee CPF contribution 20% gets you $2400 take home pay.
(A) 30% to Savings = $720
Suggest keep $500 for emergency funds
$100 to $150 for Hospitalization & Surgery, then if you have extra, go for Term Insurance (Ref: https://blog.seedly.sg/working-adults-key-insurance-policies-singapore and https://blog.seedly.sg/working-adults-4-frequently-asked-insurance-questions/ . Where you can consider either MoneyOwl(formerly known as DIY insurances) to get only what you need without overpaying/buying)
$70 to $120 for savings future study / upgrading of practical / useful certification courses, make use of SkillFuture $500 credits etc to increase your ability to earn more in the future)
(B) 50% to Expenses = $1200
Meals around $300 ~$400 (hawker food only or self prep, occassion share restraunt meals with friends / colleagues, Go dutch always).
Transport less than $100 (Take Bus & MRT only)
Mobile about $30 (Use Sim only Plan to keep cost low)
Basic entertainment $50 (Movies once a month on weekday night cheaper, find those 1 for 1 deals via credit cards / specific telco) etc. Find other free entertaiment for single or couple such as: https://blog.seedly.sg/category/entertainment
Give to parents / rentals : Around 20% to 30% depends on your family financials and parents
*$30k Uni Loan - All other balances to quickly clear this. If Item 5 don't need, then allocate to this area to clear it ASAP.
(C) 20% to Wealth via Investment:
It's great that you've learn like a sponge and readup more , do start from the main articles:
Read up more in Seedly and related / recoomended Financial Bloggers post, if current saving a/c is not the best, find another better one thru research. Own due diligence and hardwork is always required :)
There's a lot of options and myself learning still, thus go read up the articles, read up the answer in Seedly Ask community, read up the Products page for user review before trying anything. Most of all, get feet wet, try out as you learn more with practical experience , understanding 40% to 70% of each product / topic is sufficient to hands on and try out.
The worst is only someone who never do anything about it and let life / dreams passed by!
All the best!
Get basic hospitalisation coverage.
Stay away from any commission based advice if possible. Focus purely on saving discipline for now and hit every savings milestone every quarter and annually. eventually you will hit a comfortable savings amount for emergency and maybe some light investing in bonds and thereafter shares when your capital is in excess to accommodate losses.
I think you're extremely courageous to take on debt for university studies at your prime. It's also good that you're self-critical of the fact that you're predominantly cash strapped.
I think a lot of recommendations in this wonderful forum would already have offered immerse help and ideas.
The only thing to do now is Reflect and Act. It's never too late to start. I also trod a similar path coming from a penurious background, so lets all help you help yourself.
I'm a fresh grad as well! And I'd love to help get you started :)
Here are some things you can use to get started:
Personally, with my friends Jacqueline and Sudhan's recommendation, I am currently using an OCBC 360 account! Think that's a great account to start with, as it allows you to create goals and 'sub accounts' that helps you segment your money. You can use this to organize how much you'd set aside for emergency, clearing of student loans etc.
If you've taken a bank loan, be very mindful of the interest rates incurred! Ask your bank, and try clearing your debt ASAP so that you won't be snowballing into deeper debt due to high i/r!
For now, I believe your priority is to clear your debt, and focus on getting enough savings. After this, you can look into getting insurance, and higher level stuff like investing, etc.
Good luck! It's never too late to start :) Let us know how else we can help!
These are what I did and gradually find them to be good practice
1) Have two bank accounts (but if you cant keep two accounts afloat with the minimum balance, just go with one to reduce bank fees). Your salary goes to the main account (which should be high interest like OCBC 360 or DBS multiplier). You set a monthly / weekly transfer of your own spending allowance to the 2nd / spending account, you just need to keep a small balance fee enough to fulfil minimum balance and a bit of buffer. For me, I find two accounts practical, because I am very visual, and can spend if I don't know what's the limit. But when I see remaining balance = 50, and I still have to make that 50 last till next Monday, I will be mindful and control even what I eat to make sure it can last till Monday.
2) Do a budget and track your expenses. If its your first time doing it, start with 1-3 mths of past bank statements / records etc then build a mthly average. As you get better, stage 2 is 12 mths / full year budget. I split into two parts coz you just started working, and realistically you will find your spending pattern change, so it might not be a good use of your time going through less relevant stuff, and the second part is certain times dont happen monthly (eg Valentine's Day, Father / Mother Day, CNY, dental, health checks, maybe insurance, maybe taxes, vacations) - realistically the full year budget should incorporate for these type of spending.
3) Set up savings goal or some mechanism to leave money in your main account to handle the bills / wants. You should always maintain a healthy balance and not go to overdraft, or insufficient funds. When you get hit with $10 for bounced check / rejected giro deduction, it adds up and these are fees you can avoid and save. For me, I work out what my annual insurance / vacation costs are, set a savings goal to save for it - eg if I budget 9000 for annual insurance costs, 9000 / 12 = 750, I start the goal with 3x 750 =2250, and set it to save 750 monthly on the day after pay day. This is just setting aside money until when you need, which I will release from the savings goal into the floating balance to pay the bills. I do the same, and save 500 per mth for vacation, even though it hasnt happened, so when I do want to take one, I see what's available and plan the trip accordingly.
4) in terms of emergency fund, try to set aside at least 10-15% initially until you stabilize your finances. Realistically, the emergency funds should be like 3-6 mths of your necessary allowances, but there will be a limit to how much you can carve out at first. Start small and be prudent. For me, my emergency fund should be ideally 36,000 which is 6x6k, and covers 6 months of mortgage, allowances, utilities, some spending and 1/2 year insurance bills - it doesnt have travel or cover drinks so its really very barebones because it covers the things I must pay for and cant skimp further.
5) in your budget, always balance it to make sure full year, income = full year expenses and some savings. I would recommend the minimum savings be 10%, but I can do 40% (includes 15% for doing srs and cpf top-up). Start small and adjust as you get more comfortable. Honestly 20+% shouldnt be difficult once you started three works into work, and 35% I feel is the ideal spot - because one you get used to not living beyond your means (and have to go into credit card debt), you can afford some nice stuff once in a while, and yes there are times certain things will throw you off track.
6) Get hospitalization insurance, then work to cover other aspects as you scale up along.
7) after you cover emergency and necessary insurance, then I suggest regular savings plan, just stash them to save for the future, be it retirement, wedding, whatever. My first rsp was BCIP into CMT and when those quarterly dividends started flowing in, I was so happy at a time I was facing possible retrenchment. For 2020, I think I have dividends / interest to cover abit of monthly expenses so that can be like my allowance in case my job is threatened again. It will allow the emergency funds to last longer if I use these dividends to supplement for paying the bills.
I think thats enough for the day.
It is alright, everyone starts from somewhere!
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 to help you: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/
The best way to kickstart your financial journey is to take full responsibility for what you earn and what you spend.
Next, create a budget that is capable of helping you to plan for the future. The best way to do this is via automation and this is how I do mine: https://www.blog.pzl.sg/how-to-create-a-monthly-budget/
Through this process, build up your savings and emergency fund. Then start by getting the right insurance coverage as follow:
First priority is always healthcare. The reason is simple - medical inflation hits 10% in 2019. Accordingly, a single medical treatment could potentially wipe out all your savings. To do this, it is always valued to have your own private integrated shield plan. Here is why: https://www.blog.pzl.sg/is-integrated-shield-plan-necessary-in-singapore/
After you have the basic foundation set up, you may consider a basic life insurance plan that covers for death, total & permanent disability, and most importantly for critical illness.
There are many options available in the market, therefore, take your time to understand which suits your needs. Here is a general comparison between a term and whole life insurance to help you with some basic understanding: https://www.blog.pzl.sg/term-vs-whole-life-insurance-singapore
Once you have a stable income, here is the general rule:
10% to 20% of your annual income on healthcare insurance and life insurance
Basic Life Cover = 10 times your annual income
Critical Illness Coverage = 5 times your annual income
Having mentioned that, this is a general guideline that may or may not work for you. The best way is always to have an in-depth understanding on your cashflow, current situation and future goals. It is only when we know you well enough, then it is appropriate to give you the best advice or suggestion that fits into your needs.
If you are open to professional advice on how I plan my clients' finances for their future, drop me a coffee invite: https://www.work.pzl.sg/#coffee
Here is everything about me and what I do best.
Glad that you are looking into making progress this year! Progress is always more crucial than obtaining perfection, so keep going there!
I think definitely the top priority is to clear the debt first, but at the same time, we should also look into getting some savings or emergency funds build up as well.
I would suggest setting aside 10-20% of your income as savings or emergency funds for now, and if it's do-able, maybe work on a budget of 20-30% of your income to clear your debt. Also, I would propose that the bonuses you receive to always be saved up if possible, or at least the bulk of it to be saved up.
I think once the debt is cleared, then we can look into the other aspects like insurance and investments to help your money work the best it can.
Pay back your debt, debt is like a weight while trying to swim towards financial freedom/independence. Set a goal etc within 3 years, so $10k per year, 833.33 per month repayment
Build up your emergency funds min 3 months
Start top-up your CPF S.A, once you completed Step 2. Prepare for L-T retirement
Save and invest the rest of your salary via Robo-advisors using US-ETFs.
While doing Step 1-4, brush up your financial literacy,
Improve your skillset to command a better paying job within the next 2 years. This will allow you to be more quicker in accumulating your first investment warchest shoud you decide to/become comfortable in the idea of individual stock-picking once your financial literacy is brought to a certain level
If I were you, I would find a higher interest savings account first!