Building an Emergency Fund

Why do you need an Emergency Fund?

An emergency fund is a sum of money set aside for accidents, sudden injury, or an unexpected loss of income. It’s essentially what you keep aside “for a rainy day”.

Unpredictable events can be life-altering as well as expensive, resulting in financial emergencies. An emergency fund gives you the buffer you need to pay out-of-pocket expenses, so you don’t have to turn to loans or credit cards to cover the short-term lack of cash.

MoneySmart

How much should you set aside for Emergency savings?

Financial advisors have slightly varying views.

I would recommend 3 to 6 months’ of your income.

This is to provide some cushion should you be retrenched or out of job while you search for a new job or source of income.

You can start by setting aside 10% of your income or $200 monthly via GIRO (or you can do manual transfer) to a second savings account.

Banks like POSB and OCBC facilitate this with their eMySavings account and OCBC Frank account respectively.

Though it can be a better option to have the second savings account with a different bank; you can leave the debit card at home so as to avoid any urge to use it for spending.

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Read more: Why Every Singaporean Needs an Emergency Fund – And How You Can Build Yours

Saving $100k by 30 years old?

Perhaps you’ve read Saving $100K by 30 Years Old… Is It Even Possible?

A lengthy read but worthy to know that it’s possible.

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But here are my thoughts:

In all honesty, one would probably save like this when he plans to get married. Bootstrap to save 50% of take-home income.

And most of that savings will be gone on the wedding expenses.

Question is, will you be bootstrapping in your marriage life? Responsibilities and new commitments will set in.

It’d be better to be more realistic with your income level and percentage to save and manage your expectations (ie. you don’t really need to spend $50k on your wedding, do you?)

It’s different if you’re earning $4k or more; you can afford a decent lifestyle while having more to save. Yes, “the world isn’t fair”.

As the Malay saying goes, “Ukur baju di badan sendiri” (Tailor your shirt to your own body.)

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The day you start working, I’d recommend that you:

You can still work towards a financial goal at 30 while still being realistic and enjoying life.

What is the best long term advice for newly-wed couple?

The following is my answer to a Quora question: “What is the best long term financial advice for a newly-wed couple?”

A lot of marriages flounder because of fights about money. Therefore, have a financial plan, make budgets and keep to them. Put money aside in a separate account for investment, and wealth creation. That money must not be grocery money. Make sure you have a good hospitalisation plan so that one illness does not bankrupt the family. Have a clear delineation between what belongs to the family, and each of you. Avoid going into debt for consumption expenses. Debt is only an option when it is calculated to increase the family net worth.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-what-is-best-long-term.html?m=1 ]


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A succinct piece of financial advice for newly-wed couples.

Essentially, it’s about:

  • Managing cashflow
  • Having a financial safety net
  • Planning ahead for future needs and aspirations

How do people shop for life insurance?

The following is my answer to a Quora question: “How do people shop for life insurance?”

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Depending on where you are, there should be web sites that allow you to compare between different policies of similar type and coverage. For policy portfolio, you need to shop around for a good financial services consultant, instead of the policies direct, because, unless you have some experience with finance, there is no way you can do a better job than a good consultant.

In general, most hospitalisation plans have standard coverage for basic claims across the industry. The fine lines are found in claim procedure, hospitalisation payout and in how quickly your claim is processed. Before you intend to make a claim, take a look at the schedule of waiting periods for various categories of claims.

For accident plans, you need to look at the area of coverage relative to where you are, and the depth of coverage. Does it have coverage for hospitalisation benefit, meaning a payout because you are off work? Does it cover separately for dismemberment and loss of limbs?

For whole life, you need to consider whether the death benefit pays out for accidental death, for suicide, or if there is a waiting period. You have to consider what constitutes disability in your area. You have to look at whether it is critical illness or terminal illness coverage, or both. Terminal illness means you are expected to live weeks, or up to six months, in some cases. Is the critical illness multiple claims for different categories of severity, such as early and late stage cancer? What types of critical illnesses are covered?

This is all for base coverage. There are also tailored plans, or plans specific to a particular condition, or even mental illness.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-how-do-people-shop-for.html?m=1 ]

What are the top 3 life insurance policies you can recommend?

The following is my answer to a Quora question: “What are the top three life insurance policies you can recommend?”

I am speaking strictly from a Singapore perspective, although I believe the general principle may be applied elsewhere. There are three types of insurance plans that form the foundation of our liability mitigation.

Firstly, it is important to have a good hospitalisation plan. If you can afford it, get the highest tier of coverage, and get it as early as you can. Hospitalisation plans are multiple claim, and are for life. Having a pre-existing condition because you did not get a plan early enough means getting saddled with large hospital bills later.

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Secondly, it is important to have a good accident plan. Like hospitalisation plans, they are multiple claim. There is also an option that pays you something for the duration of your incapacitation, or a period thereof.

Finally, the third plan to get is a whole life plan with disability and critical illness coverage. These plans can get expensive, but it is good to start with one, even a cheaper plan, and then add to the coverage as your earning capacity improves.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-what-are-top-three-life.html?m=1 ]


Though I agree with Terence in principle, I must add that client’s circumstance is still the main factor of consideration.

That is often when I would recommend a Term insurance plan instead of a whole life plan.

I would recommend a Personal Accident plan that is customisable to tailor to specific needs and concerns.

It should also be noted that this post merely addresses financial protection needs, without factoring in wealth accumulation needs such as retirement planning and child education planning.

With which budget could be a concern; the overall financial planning has to be adjusted accordingly.

4 Lessons on Personal Finance from Covid-19

Perhaps you’ve read 4 Key Lessons That COVID-19 Has Taught Me About Personal Finance.

They are:

  1. Always set aside Emergency savings.
  2. Diversify income streams and skill sets.
  3. Get suitable and sufficient insurance coverage.
  4. Prepare your Will and complete your Nominations.

Here I’ll share additional comments and thoughts on the 4 lessons.

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1. Always set aside Emergency savings.

How much should you set aside for Emergency savings? Financial advisors have slightly varying views.

I would recommend 3 to 6 months’ of your income.

This is to provide some cushion should you be retrenched or out of job while you search for a new job or source of income.

2. Diversify income streams and skill sets.

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The article has provided some beneficial thoughts. And one can look to Work Skills Future to upgrade one’s self.

What I would like to add is to emphasise on managing your cashflow.

Having additional income streams and skill sets will not make any difference if you are not managing your cashflow well.

3. Get suitable and sufficient insurance coverage.

I would add that this would be a good time to get in touch with your financial consultant/planner to review your insurance portfolio.

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This would benefit you in at least 2 areas:

  • identifying shortfalls in your insurance coverage and what you can do about it
  • if you’re financial tight or affected due to the current situation, your financial consultant/planner should be able to help you restructure your insurance portfolio and possibly save you some premiums

4. Prepare your Will and complete your Nominations

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Perhaps this is a good time to address the elephant in the room.

Estate planning should be addressed sooner than later.

If there is only one thing the current pandemic has taught us, it is that life is full of uncertainties.

You can never be too prepared.


Do get in touch with me should any of the above lessons be of immediate concern to you.

There’s nothing wrong to take a loan.. but..

Did the title catch your attention?

I know it did when I first saw it appear on my Facebook newsfeed.

I hope you didn’t miss out the end part “first, ask yourself these 5 questions”. What are they?

  1. Can you afford a repayment?
  2. Will a loan help you reach an essential goal?
  3. When will your financial situation improve?
  4. Are you bound to a lot of financial commitments?
  5. How is your credit score?
Image credit: Vulcanpost.com

I don’t deny that at times it’s tempting to take a loan, but the 5 questions will help you evaluate if you truly need the loan and if it is essential.

Quite often, it’s good to consult your financial planner/consultant: to review your finances, especially your cashflow, and evaluate what would be a feasible solution for you.

Sometimes, converting your whole life policy to a paid-up term insurance would be a feasible option to ease your cashflow.

Or a partial withdrawal from your investment-linked policy can be another option that can be considered.

Point being, there can be more feasible options than taking a loan. Yet, it is also possible that taking a loan is still necessary.

Consult your financial planner/consultant. Let him help you decide what would be the best solution for you.

Who invented investing?

The following is my answer to a Quora question: “Who invented investing?”

When the first hominid set aside some food for the next day instead of eating everything in that one meal, so that it could be traded for favours in scarcity, that was investing. Investing is putting aside assets for later use, or greater potential future gain .

Anyone who saves money is practising a crude form of investing. Anyone who collects things, and assigns a value to them, is investing. As financial systems got more sophisticated, and an entire class of financial advisors and experts arose, people got intimidated by degrees of complexity, when at heart, it is a simple matter of anticipating scarcity so that certain assets can be parlayed into profit.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-who-invented-investing.html?m=1 ]


Succinctly explained for an actually simple concept.

This should be the first step to understanding investment, before we go into the complexities.

What arguments exist for whole life insurance over term life insurance?

The following is my answer to a Quora question: “What arguments exist for whole life insurance over term life insurance?”

Both whole life and term have their uses. Generally, I recommend whole life when the client is younger. If they can afford it, I recommend a limited pay whole life, so they pay for the coverage during their earning years only. When taken early, whole life is cheap. It will never be cheaper than a term plan, but when we calculate the total premium of a whole life plan over the course of the payment term against multiple term plans taken at successively later periods of life, whole life premiums are much cheaper.

Secondly, whole life plans have a surrender value; term plans do not. This makes them a financial instrument that can be borrowed against if it absolutely becomes necessary.

Finally, whole life coverage for the duration of the plan, once incepted, is guaranteed. When a term plan is up for renewal, and there is a claim against it, that renewed term plan may not cover the condition claimed against, treating it as a pre-existing condition. This may not be true for all term plans, however.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-what-arguments-exist-for.html?m=1 ]


As mentioned in a previous post, while I agree with Terence in principle, I often find myself adopting a slightly different approach, depending on several variables such as:

  • budget
  • time horizon
  • other financial commitments and obligations

Hence, a young client may opt for Term life insurance, weighing in the above considerations. Or simply to maximise his insurance coverage at the lowest premium, while still having surplus for other planning needs.

Hereby, creating an insurance portfolio for the client.

Client can choose to convert his Term life insurance to a Whole life insurance later on when he can afford, without the need for medical underwriting.

MediSave Maternity Package

[This post is extracted from CPF Board’s FB page.]

Welcoming a new baby to the family is an exciting time for the family!

While there are maternity costs to think about, check out how Chris and Pam can get additional support from the MediSave Maternity Package (MMP), to help reduce their out-of-pocket expenses.

Find out more schemes and benefits to help you ease into parenthood: https://www.cpf.gov.sg/AYRBundleofJoyFB

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