Planner Bee was designed around the three core pillars of financial planning.

Here we break down these concepts, one pillar at a time.

Guidelines to a healthy cash flow

Your cash flow refers to the relationship between your income and expenses. Your income level is less easily changed in general, so financial advisors will first examine your expenses, where we can identify leaks or areas to cut back on.

1. Emergency fund adequacy

Also known as liquidity ratio, this refers to liquid cash that a person should have for unforeseen situations, such as a sudden loss of income.

This money should be kept in cash or equivalent financial products that can be liquidated and accessed instantly.

Calculation: Emergency fund adequacy (a.k.a. liquidity ratio) = Cash / monthly expenses

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Note: For medical emergencies, we suggest the use of insurance to mitigate these. We’ll cover this in the Protect pillar.

Recommendation: Although its impossible to be prepared for all scenarios, we recommended 6 months of your monthly expenses to be set aside for those who are employed.

For the self-employed, or for those who believe it will be harder to find a new job within a few months, that number goes up to 12 months.

2. Savings ratio

This refers to the percentage of your income that you save.

Calculation: Savings ratio = Amount saved / amount earned

Recommendation: A general rule of thumb is 10% of your income. This amount could go into investments if you have already set aside an adequate emergency fund.

3. Debt servicing rato

This measures the proportion of your take home salary that is used to service all debts. This includes housing loans, credit card loans and automobile loans.

Calculation: Debt service ratio = All debt repayment / net monthly income

Recommendation: As a general guide, debts should be less than 35% of your monthly income.

4. Non-mortgage debt servicing ratio

Outside of paying off a mortgage, other types of debt include credit card payment, or a car loan. These are not ideal debts in general because they tend to be related to lifestyle expenses instead of contributing to long-term investments, such as property.

Calculation: Non-mortgage debt servicing ratio = Non-mortgage debt / net monthly income

Recommendation: Spend less than 15% of your income for on these non-mortgage debt payments.

5. Solvency ratio

This indicates a person’s ability to repay all their existing debts with their assets. It reveals the probability of a person becoming insolvent, or bankrupt. The higher the ratio, the better your financial condition.

Solvency refers to the ability to pay one’s debt as they come due while this ratio helps to highlight the potential medium to longer-term solvency issues.

Calculation: Solvency ratio = Total net worth / total assets

Recommendation: As a general rule of thumb, your net worth should be at least 50% of your total assets.

6. Debt-to-asset ratio

This ratio determines how much of your assets are funded by debt.

Calculation: Debt to Asset Ratio = Total liabilities / total assets

Recommendation: You should have no more than 50% of your assets leveraged through debt. 50% or less means that there are enough assets to cover your liabilities.


Examining your financial health is a lengthier process than most people assume at first glance. But it’s worth it to ensure you reach your goals, including an easier retirement away from the anxieties of dealing with unpredictabilities.

We recommend this process be repeated every year, or if your income changes, or if situations at home change your financial commitment. These include getting a new job, having a newborn, getting married, buying property, or if a family member falls seriously ill.

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Determining your insurance needs

Holistic financial planning should always include insurance, and this applies to everyone, regardless of financial status.

Most people look at insurance to be prepared for unforeseen medical situations. While some might argue that they have the money to protect themselves, but it would be silly keeping that much liquidity that could go into investing (we get into this more in the third pillar, #GROW MONEY).

Further, how much money to set aside is a moving target with medical inflation. Global medical inflation has hit 9.7%, and the numbers are even higher within Singapore.

This does not mean that you should purchase insurance for every single risk in your life. Purchase insurance only for risks that you cannot afford, or that do not make sense to absorb. Often, these tend to be medical costs, loss of income, and the cost of long term disability.

We created this handy insurance map to help you navigate these scenarios.

1. Life insurance

Life insurance provides a lump sum of money to the family upon the insured person’s death. It can help their family with the sudden loss of their income, and to repay mortgage loans in their name.

Calculation: Monthly family expenses x 10 years + total outstanding debt – existing savings – existing investments


Planner Bee uses household expenses for this calculation. For most people, getting sufficiently covered for every aspect is challenging, so we believe in guiding people towards getting sufficient coverage across different areas to sustain their lifestyle, at the very least.

While this will not guarantee that the sum from insurance is sufficient to sustain your lifestyle, it gives you a reasonable period of time to find alternatives.

  • Sum to insure: The general rule is to replace 10 years of your income or household expenses, plus any outstanding loans.
  • Period to stay insured: It is recommended to stay insured till you reach retirement. As we move into later stages of life, the coverage required is likely to go down as we have less debt, or fewer dependents to worry about. Hence for some people, they choose to opt out of such coverage in their retirement years. Others may opt to be covered for their entire lifetime for legacy planning purposes.

2. Long term disability / Total permanent disability insurance

Long term disability could be caused by accidents or illnesses. And with life expectancy increasing, we also need to consider that additional time could be spent in poor health and reduced income.

Calculation: Monthly family expenses x 10 years + outstanding debt

Note: We don’t include your existing savings and investments because we assume these assets are directed towards other goals or retirement.

Recommendation: We recommend a 10-year calculation of your expenses to mitigate this. In Singapore, the average period spent in poor health is 10.6 years, based on this study.

3. Critical illness insurance

This type of insurance provides a lump sum of money upon diagnosis of one of the conditions it covers. This money should be used to replace the loss of income during your recovery period. In Singapore, there is a fixed list of critical illness definitions that life insurers need to follow and most will also provide additional coverage for conditions beyond the list.

Calculation: Annual income x 5 years

Recommendation: The period of recovery from a critical illness is 5 years on average. Hence, it is recommended to have an income source amounting to at least 5 years’ worth of your income.

4. Early critical illness insurance

This type of insurance provides a lump sum of money upon diagnosis of one of the conditions it covers. This money should be used to replace the loss of income during the recovery period.

Calculation: Annual income x 2 years

Recommendation: The period of recovery from an early stage critical illness varies from person to person. It is recommended to have an income source amounting to at least 2 years’ worth of your income.

5. Medical insurance

People say this section is confusing, and we get why. The structure of medical insurance coverage can be incredibly nuanced, so we have categorised these into scenarios to illustrate.

A proper financial plan will include hospitalisation insurance coverage at the very least, as bill sizes can run in the tens of thousands — or even millions.

Sudden hospitalisation can wipe out savings, bankrupt families and derail them from their long term goals.

In comparison, accident insurance and outpatient medical insurance plans are optional to some as bills are usually smaller.

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Guidelines to investing

Investing might sound like a scary concept to those who are unfamiliar with the topic. However in the current low interest rate environment, keeping your money in banks will subject your money to inflation.

1. Net investment assets to net worth ratio

This measures how much of your assets are used to grow your overall wealth. This should exclude your place of residence because you need somewhere to live. You can’t just sell your place to cash out your profit, and not have to buy another home, so your place of residence should be left out of the equation.

The caveat is there are situations where people pocket the profit when they make the change to downgrade. Otherwise, selling a home for high and buying another while markets are high does not make sense.

Calculation: Net investment assets to net worth ratio = Total invested assets / net worth

Recommendation: As a general guideline, a 50% ratio is healthy. As we approach retirement, we will lose our ability to earn a salary and active income, so we will rely more on passive income from investments. Naturally, this this ratio should increase as a person approaches retirement.

2. Regular investment ratio

Investing regularly is a good way to ensure we are constantly investing excess savings. This is also a good implementation of the dollar cost averaging strategy, which is a good way to reduce investment risk as a result of bad timing of investments.

Calculation: Regular investment ratio: Regular sum invested / income

Recommendation: Invest at least 10% of your income towards this.

3. Retirement readiness

Saving for your retirement should begin as early as possible so your nest egg can benefit from compound growth. Plus, inflation makes the final figure a moving target.

Assuming you have 30 years to work towards retirement, see how investing can help you achieve a retirement goal of $1.5 million with more ease.

Annual return rates on investments
Sum to invest each year

A $1.5 million retirement fund will help to sustain a retirement period from age 60-95 with a monthly income of $4,000 based on today’s prices.

If you find it hard to meet your retirement needs, perhaps it’s time to review your current lifestyle.

Calculation: Retirement readiness: Future assets / retirement needs

  • Future assets: Future value of current investments + future value of regular investments
  • Retirement needs: Future value of the current cost of living expenses (excluding loans) x (life expectancy – retirement age)

Recommendation: A general 80% score is ideal and means that you are likely to be able to maintain your current lifestyle during your retirement.

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