Finance tips for young adults in Singapore: Working your way to financial wellness

Now that we’ve gathered the basic gist of budgeting, it’s time to turn to… saving money. It’s the very crux of why we’re even concerned about money management, since having sufficient savings is key to unlocking the main goal of financial wellness. 

First, we’ll need to deliberate how much we should have in our emergency funds – aka our rainy day stash. Most finance pros will recommend savings of at least six months, but if things aren’t going along swimmingly, consider saving up to nine months. Also, remember that the purpose of a rainy day fund is exactly that – it’s for the trying times when you need access to cash. Hence, your emergency funds should not be tied up in a fixed deposit.

Secondly, it’s also useful to consider what you’re saving up for. A new iPhone compared to a BTO flat might seem massively different, especially when it comes to the sum you’ll need to save. But ultimately, you’re still working towards a goal. To make it all seem more tangible, it’ll be useful to set mini financial goals – perhaps to save a certain amount every month or year. 

Once you have a better idea of what you’re saving for, it’s time to turn towards investing your money. Most people shy away from investing – we’ve all heard horror stories about that one friend who lost all his money in penny stocks. To avoid your own investment traumas passed around like a party favour, make sure you first understand what your risk appetite is. Everyone has varying levels of risk: it’s what you’re comfortable with investing in for the returns you’ll get. 

For those with a lower risk appetite, these are just some basic investment strategies to consider:

• High-interest savings account
• Fixed deposits, which will lock up your money for a fixed period of time
• A diversified portfolio, balancing a mix of blue chip stocks
• CPF Investment Schemes, to invest your CPF Ordinary Account* and Special Account savings^
• Investment platforms such as Syfe and Endowus 

As an all-in-one digital investment platform, Syfe allows you to take better control of your finances. From fully-managed curated portfolios for long-term wealth building or investing in US stocks and ETFs, it’s a holistic platform for all your investing needs. 

*More than $20,000 in your OA needed.
^More than $40,000 in your SA needed.

Instead of dumping in all your money at once, it’s also a smart tactic to use the dollar-cost averaging strategy. Sounds super technical, but really, it just means spreading out your investments over time on a regular basis so you’re not getting hit in the face by the market’s potential volatility. 

There are various other high risk, high reward investments, but since we’re still trying to wrap our heads around investing as a young adult – we certainly advise sticking to lower risk investments for now. 

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