During the two years you are in NS, it is the perfect time for you to save money!
Many of you are probably pursuing a further education after NS, some may even be thinking of starting their own business, or some may just want to kick-start their savings for their future: marriage, house, car, children, or even retirement!
Personally, I am going to be enlisted in about two weeks time. I just want to give thanks to all the guides posted here, and the helpful people in the Discord for answering all my chao recruit questions. I hope this guide will help pay back for some of the help I have received.
This guide will explain the basics of financial planning and literacy.
1. Calculating and Optimising Your Expenses
First things first, what you need to do is to calculate and total up the amount of money you spend in a month. Everything from your srctelco bills, down to your bubble tea addiction. This shall be your ‘Fat Expense’.
Now, obviously, there will be a ton of stuff that you usually spend your money on that during your NS, you probably won’t be spending much on, if at all. So, things like transport (especially for those Grab addicts out there), food, and even things like computer games/IAP will be scaled down naturally without any effort from you. (MINDEF will help out in that department.) So, with that in mind, amend your ‘Fat Expense’ accordingly. This shall be your ‘Lean Expense’.
The following is optional, but you can go ahead with it if you are dedicated enough:
You can further cut back on your ‘Lean Expense’ by actively limiting your spending. Ideally, it should only consists of your basic expense and very little luxuries. Some examples:
Limiting all taxi rides, only go for public transport
Limiting dining expenses outside, eat only while in camp or at home. Your parents cooking won’t be there for you to enjoy forever, you know. (Morbid, but true.)
Downgrading or canceling unneeded/superfluous subscription plans like Netflix 4K to 1080p.
Congrats on making it this far! Keep those two figures in mind as it is important, and we will move on to the next step.
2. Emergency Funds
Emergency funds are basically your ‘rainy day piggy bank’.
In a perfect life, you will never need to touch this piggy bank, but life is not perfect. You or your family might get into an emergency, be it financially or medically. It is also handy for, in the future if you lose your job, you can take your time finding a new job while having 6 months of living expenses already saved up to rely on.
All of this is to protect you from debt. (Which is something you never, never, never want to get into.)
This is how much you need in your emergency funds: 3-6 months of your ‘Lean Expenses’ stored in a high-yield savings account with high liquidity. (Don’t fret over these cheem terms, I will to that next.)
3. Optimise Your Savings
Right, so I mentioned earlier a ‘high-yield savings account with high liquidity’. It is basically a bank deposit account that has high interest and absolutely no fees.
I am sure many of you probably have a POSB whatever account that just gives you a debit/ATM card, and pretty much no interest. (Something like $0.02/month)
This is basically that, but better in every way.
The following is the list of accounts I recommend, and the purpose of the account:
I. Emergency Funds
I store 6 months’ worth of expenses into my Singlife Savings Account.
It is capital guaranteed by the SDIC. (Your money is as safe as it is in the bank.)
It has a non-guaranteed interest rate of 2.5%. (What it means is that it is not always 2.5%. But, based on my past history with this account, it has an average interest rate of around 2.2%. )
It is very liquid. You can instantly deposit and withdraw money via FAST.
ABSOLUTELY FREE!!! No fall below fee, no etc.
II. Savings Account
I store a month’s worth of expenses into my Standard Charted JumpStart account.
It is capital guaranteed by the SDIC. (Your money is as safe as it is… wait, it IS a bank, so…)
It has a guaranteed interest rate of 1%
It is very liquid. You can instantly deposit and withdraw money via FAST.
Debit card linked to the account has a no frills 1% cashback on all debit transactions (with some limits of course, check their TOS)
IT IS ALSO ABSOLUTELY FREE!!! No fall below fee, no etc.
sc.com/sg/save/savings-accounts/jumpstart
III. ATM Account
This account will pretty much be empty almost always. It will exclusively be used for cash deposit and withdrawals. I use DBS My Account.
Access to all DBS/POSB ATMs nationwide
And need I say it again? ABSOLUTELY FREE!!!
dbs.com.sg/personal/deposits/savings-accounts/my-account
III part 2. Optional: Expenses Account
If you do not mind complicating things up, you can apply for the SAFRA card and link it to your ATM Account.
This is for you to stretch every dollar, as it provides you with a slightly higher cashback (of an additional 1%, total 2%), and some other SAFRA privileges.
The downside (or upside if you are like me) is that every time you need to spend money, you must transfer the required amount to the DBS account. (This allows me to be more conscious of my spending though, so it is up to you.)
dbs.com.sg/personal/cards/debit-cards/dbs-safra-debit-card
IV. Long-term Savings
For long-term savings (timescale of >3-5 years), you should park your money in an investment vehicle.
Unlike the rest I mentioned above, this has some risks involved. So if you are not comfortable with it, feel free to skip this step.
I personally use StashAway for my long-term savings. I won’t go into the nitty gritty details of these kind of services, but if you would like to know more details, this is an article from a finance blogger that I really respect: firepathlion.com/a-bet-on-humanity-why-index-investing-works/
Much lower costs than traditional brokers
Completely automated and passive investment (Meaning you don’t have to do anything, just pump money in)
No minimum investment required (You can invest $50 one month, $200 the next, and nothing at all the month after)
(If you would like a referral code which allows BOTH you and I have up to $10,000 managed for free for 6 months, PM me. Details below.)
4. Splitting Your Allowance
I am sure many of you, by now, have this question in your minds. ‘This guy talking what cock? I only get paid $630 during my BMT, still want me save this, invest that.’
My answer to that, my little turnips, is the 3:2 rule.
Once you receive your first allowance, do the following:
Set aside the money needed for the month’s expense and put it into your JumpStart (or equivalent) account.
Split the remaining amount 3:2. Assign 3 to the investment account, 2 to the emergency fund account.
So, for those who suck at math, let me give you an example.
I will be using $300 for this example:
$300 divided 5 = $60 3 x $60 = $180. This will go to your Singlife (or equivalent) account.
2 x $60 = $120. This will go to your Stashaway (or equivalent) account.
If you are risk-adverse and do not want to invest, then just put all of it into your Singlife (or equivalent) account.
That is pretty much it for now. I will come back in the future and post more finance tips.
If you have any questions, do not hesitate to comment here, PM me, or ping me on the National Service Discord channel. I will do my best to help you.
I can be found here: discord.com/invite/jZzsPGS as Oxy#4350
Disclaimer: I am not a trained finance professional. I am not a trained anything. I just have a rough experience growing up. Everything I have covered is my opinion only. I made every effort to make sure the information above is true and accurate, but since I am not a trained professional, I cannot guarantee anything.
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