Asked on 24 Dec 2019
Planning for the future in terms of big-ticket purchases. Are there ways to save money/ earn rewards that I should be looking out for when I make these big-ticket purchases?
In terms of what comes first, wedding, house, parents, kids, car.
For me, I am planing for my wedding and house now - so I've set aside a budget for it. Of course, it depends on how much you want to spend on it, like spend more on housing than wedding etc.. Also depends on your spouse.
Kids depends on you both - but the immediate requirement would be your parents, right now it would just be monthly allowance for me. I have not set a budget aside for car and kids because it's not in the near team.
In terms of planning for retirement, the excess cash I have after setting aside above + 6 months emergency fund is used to invest in growth stocks. That way I can compound my $ better than just leaving it in the bank (already maximized).
Suggest for your wedding and housing, you can take a look to sign some credit cards for the sign up bonus. Chances are that you can earn quite a bit of bonus miles!
Some tips based on experience here.
1) Try not to spend too much on the ring (its really not as important as we think only me and my spouse views)
2) Try to avoid paying for additional photos beyond your wedding studio package (we hardly look at the album a couple years into marriage)
3) Try to get a house near to your parents/in-laws to enjoy the housing grant (we dont get to enjoy these grant when we got our house in 2013 at the peak!)
4) Try to fixed a renovation budget and stick to it (a simple contemporary style can be cheap and superd looking at the same time)
5) Try to compare and get your electronics all from the same place to get the best deal (negotiate when required, they give good discounts or vouchers)
6) Try to get a car only when you need it (i.e. when you are going to have a child and when it really becomes a need rather than a want)
7) Try to opt for cheaper baby delivery venues (we did thompson and finding that NUH or KK is actually equaly great)
8) I can go on forever on this but i think this is great for now. GL.
I think a good approach to go about planning for big-ticket expenses is to have a timeline for all of them along with tentative amounts fixed for each. This will allow you to have clarity on the cash flows that you will require at points of time in the future to fulfil the purchases. Now, consider each of these to be a separate financial goal and go about investing in a manner that you have enough saved up by the time the event arises.
Retirement is not really a one-time expense and so it cannot have a fixed date on the timeline. However, the age that you plan to retire at can be taken as a starting point to arrive at a corpus value that you will require to sustain post-retirement. Based on these financial goals and your risk appetite, you can create a portfolio. You can make use of a robo-advisor to help you arrive at the optimal portfolio.
I work at Kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.
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/
Next, create a merticulous planning that crafts out everything that is going to happen next in your life. Thereafter, list down all the associated expenses that you need in order to achieve the goal, e.g. $150k for family related (e.g. 10% downpayment for house, $50k renovation, $30k wedding)
Once this is completed with the associated timeline, work backwards to find out the amount of money you need today in order to achieve each goal. Then, 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/
With this completed, you will have a clear understanding of your finances and your future. If you are open to understanding further on how I conduct comprehensive financial planning for my client, drop me a coffee invite: https://www.work.pzl.sg/#coffee
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The best way to think about retirement planning is to first know what kind of life you want to lead. From there, you would know how much that costs, and then how much you would need by the time you hit that retirement age. There's no magical $1m or $2m number. To each his own depending on the kind of life you want to roll out at the end of our productive years.
We have built a free calculator specifically for this purpose - to help individuals understand their plan, and if they are able to stick with it to achieve their retirement goals.
Tan Yu Ji, Economics at Nanyang Technological University
Answered on 13 Aug 2020
I think you have named almost all of them! For housing wise, do take note you are able to pay for CPF once your flat is ready so that is not that big of a concern. You also need to pay 10% of your downpayment for the house. For wedding wise, you must be able to fork out at least 30k, but do realise this amount will be probably be recuperated through the ang paos you get from your familiy and relatives (just being realistic here). Hence, the main amount of money you need would be renovation for your house, I would think that adds up to be around 80K. But, you can always do that slowly too.
I would suggest saving around 20% and using that amount to invest. This amount will be compounded and you will achieve the desired amount you need for retirement!
I think you have listed the main expenses. For me personally I'm only aiming for a house and trying to save and grow my wealth as much as I can.
There are too many variables when planning for retirement currently so just have a rough goal and work towards it.
I actually only started saving for my retirement after WEDDING.
Its like the footage for UP the movie.
As you save for the long term goal, something in the short term will pops up and you needs to "break the saving bank" for it.
Thats part and parcel of life.
Key is managing the spending at this various life milestone if you want to keep enough for the future.
For example, wedding don't have to be super expensive.
House don't have to be super big.
Car.... you can drive a japanese car or maybe take the public transport?
The more you spend on milestones, the less you have to invest.
First of all, I think we have to consider our income if we can manage the cashflow for the significant expenses that you highlighted. So it's important to plan the timeline, whether you're comfortable that all will come around the same time, say happen within 2 year timeframe.
It's very hard to have a planned amount of how much you need, because circumstances are all different, i.e. how lavish one's wedding is, how big a flat you want, if you need a car etc. So it's more ideal to plan based on combined savings between you and your spouse, then decide how much is adequate as spending.
Bear in mind, don't overspend or over leverage especially on wedding such as paying more for additional photos/photo album. Cut down drastically on the wants and you'll do fine.