Posts

How to Manage Your Emergency Funds

How much should I have in my Piggy Bank?

Human life is full of unexpected events. You never know when your car can just break down, water heater replacement, roof repair or an injury come on your way. In those occasions you are in look out of ready cash to cover you up. That’s why we all want to save for that rainy day and recently it has been seen that many Singaporeans have developed this practice of saving.

With more options and individual commitments there is a lot to explore the concept of emergency fund. It is usually defined as three to six months of income which is left untouched and should be kept at easy reach to access in emergencies.

Most of the time emergency fund is kept in simple savings account, as a fixed deposit will not let you liquidate the cash before a certain time line. Though its always best to consult your financial advisor.

How do I get started ?

Planning your emergency fund requires lot of attention, discipline and analysis. Set goals or targets that are achievable and be genuine as there isn’t going to be any reward unlike other financial goals like making a down payment for your car.

But the best part about the emergency fund is – once you reach the goal, you don’t have to invest or set aside more money into it unless there are life changing events which account for additional members to be accounted such as new born.

Savings for beginners can be done with following guidelines:

1. Priority to savings just after monthly expenses and debt payments

If you are already loaded with debt that’s your priority and your day to day expenses like food, transport, loan payments, education fees are all to be paid before you take the chunk out for savings. You can either set aside all the money left after covering all your expenses or set a percentage every month. There isn’t an exact answer or figure to quote for savings. Bottom line your emergency fund should be an amount that makes you feel secured.

2. Automate the Saving Process

Setting up an automated process such as GIRO or ACH (automatic withdrawal) will help fund x% to your savings account regularly. This covers you for any lack of discipline. If you are one of those who is unlikely to save regularly then setting up the automated deposit feature should help.

3. Direct bonuses towards Emergency fund

If saving is difficult from your monthly income, then set aside all your bonuses into the emergency fund instead spending it. Its difficult but remember once you have achieved the target, you can blow your future bonuses towards luxury expenditures.

4. Use Blitz Approach

If you can really handle a year living without partying, you can build your emergency fund in no time. Opting a blitz life style – which means living on just lesser (approx. 50%) of your income can actually get you to the target and then you are relaxed with your saving goals.

5. Limit unnecessary expenses – Less you spend, you save more. Some of your expenses could be unavoidable such as uber taxi rides, too many party or get together, unnecessary shopping. Go for smaller getaways, as moment you reach your goal you can spend as you like.

6. Consider using Singapore Saving Bonds

You can consider Singaporean saving bonds which can help you save and also earn interest of 2.6 per annum. Although this is not a very lucrative rate but at least your money will not stagnate and can grow over a period. SSB is comparably better than fixed interest deposit as you can redeem your bonds anytime without any penalty for exiting before maturity. This bond works with a flexibility of easy cash at disposal should there be any emergency.

7. Save in Dollars

Open a multi currency account which enables you to save different denominations ( RM 5000, USD$700 etc. ) and Citibank International Personal bank has one of those options. With money being in different currency, you cannot just walk up to an ATM and splurge on new pair of jeans. You can also be benefited occasonallly from exchange rates when Singaporean dollar value reduces compared to US dollar.

Start saving , its never too late. Initial days could be daunting but its financially wise to plan for the worst. You may not know what emergency situation could crop up but building emergency fund will make those circumstances less stressful. However, should such scenerio arise, speak with us at Credithub and see how we can help you.

The Importance of Money Saving – For your kids

The future is extremely unpredictable and it is difficult to ascertain the kind of situations that we would have to face in the coming days and years. That is why, it becomes extremely important and vital to invest and save money in a strategic and proper manner.Some of the reasons why Money saving, financial planning is important are as follows:

1. For Emergency Funds

In order to tackle emergencies in a proper manner, you need to have a substantial amount of money that you have saved over a period of time. These emergencies could include any number of things like building a new roof, unexpected medical expenses, sudden layoff leading to loss of steady income, etc.

2. For the Improvement in life expectancy

As medicines and public health facilities improve, the average life expectancy of an individual is all set to rise. This means that you would require more money in order to maintain the same quality and standard of life over the years.

3. For the Volatility of social security

Even if the government in your country provides social security, it cannot be considered as the main source of income. Social security, at best, can be a small part of your additional income and in no way should you depend on it entirely for your daily expenses. If at any time, social security plans are withdrawn, you will be left with no source of income and that can become a major hurdle in your financial independence.

4. For Kids Education and other expenses

The cost of both private and public education is increasing every single year. Not just that, many daily needs are also becoming more expensive. So in order to live a comfortable life, it is of utmost necessity that you save money at every stage possible.

Investment plans are one of the best ways that can help you save money in an easy and simple manner. Further, it becomes much easier to manage your investments when individuals are in the habit to save on a regular basis. It is, therefore, important to balance both your personal income and expenditure on a monthly basis before you can invest your money in a proper manner. Some steps, that you can follow to save money in a better manner, include:

Create a budget to track your expenses on a monthly basis

Creating a budget will help you identify your spending areas and in turn, regulate cash flow. When you track your expense against your budget in a proper manner, it will help you save money by ensuring that you do not spend on things that you do not need.

Hence, when your saving plans are in place, it will ensure that your investments are protected and safeguarded at all times. At all times, make sure that your extra money is invested in good investment plans so that you are able to reap rich dividends in the future. Good saving plans and investment plans are extremely important in this volatile and ever changing economic environment. In the end, saving and investing money is very important and will help you live a more comfortable life in the long run.