Congratulations on finishing the last lap of your education journey! Now that you’re out of university, it’s time to enter the real world. Chasing your dreams and ticking off your bucket list may be on your mind now, but getting started on your personal finance is something you should be thinking about as a fresh graduate.
Once your first paycheck comes in from your first full-time job, financial responsibilities will start to kick in, giving you a taste of reality. To help you get ahead and ease you into this transition, here are 6 useful financial tips to keep your finances in check!
Get your finances in order with these six tips
1. Find a good savings account
In Singapore, it’s relatively common to have a savings account as a student. Once you enter the workforce, it’s an entirely different ball game. You now have the opportunity to choose the bank account that best suits your needs as a working adult.
Apart from safeguarding your funds in a secure place, finding the ideal savings account also allows you to build credit and bear interest as you save — you’re essentially getting paid a small amount to store money in the bank!
Some of the few features to look out for are:
- Interest rates
- Minimum balance
- Initial deposit
- Monthly account fees
- Ease of withdrawal and transfers
- Mobile banking features
Don’t know where to start? Here’s a quick rundown on some of the most popular savings accounts in the country today.
|Savings Account||Minimum Balance||Minimum Initial Deposit||Monthly Fees||Interest Rates (per annum)|
|POSB SAYE Account||$0||$0||$0||Base interest: 0.05%, Bonus interest: 2%|
|DBS Multiplier Account||$3,000||S$0||$0||Base interest: 0.05%, Bonus interest: 1.4% to 3.8%|
|OCBC 360 Account||$3,000||S$1,000||$0||Base interest: 0.05%, Bonus interest: up to 2.38%|
|UOB One Account||$1,000||$0||$0||Base interest: 0.05%, Bonus interest: up t0 2.5%|
|Maybank Save Up Programme||$1,000||$500 for Singaporeans, $1,000 for other nationalities||$0||Base interest: 0.25%, Bonus interest: up to 3%|
|Standard Chartered Bonus$aver Account||$3,000||$0||$0||Base interest: 0.03%, Bonus interest: 2.88%|
2. Start building your emergency fund
From minor hiccups to major emergencies, the last thing you’d want is to get caught in a financial pickle. An emergency fund is essentially money set aside for unexpected life events such as medical emergencies or job loss.
Depending on your salary, financial experts recommend saving at least three to six months worth of living expenses. This gives you sufficient funds to keep you covered on a rainy day.
For those still paying off debt, consider reducing the amount according to what your budget allows for and start with small goals first. Begin by saving a few hundred dollars a month and slowly work your way up to cover several months’ worth of expenses.
3. Prioritise your student loan
Student loans generally have low-interest rates and more flexible repayment options compared to other loan types in the market. Despite that, it still shouldn’t be taken lightly. You wouldn’t want to watch your debt and interest rates stack up against you in due time. One of your main priorities as a fresh graduate should be devising a plan to pay your student loan quickly and diligently sticking to it.
Take this time to go over your loan repayment requirements once more. Most banks offer flexible monthly repayment options and extended loan tenure periods, giving students the freedom to repay their debt without financial pressure.
If your loan interest only begins occurring after your course completion, take advantage of this window and consider paying off a portion of your loan before the interest takes effect.
Need a refresher on your current loan? Here are the most recent interest rates for student loans in Singapore.
|Student Loan||Interest Rate (per annum)||Processing Fee (Upon approval)||Payment (Per Month)||Maximum Loan Tenure|
|POSB Further Study Assist||4.38%||2.50%||$371.77||10 years|
|DBS Study Loan||4.38%||2.50%||$371.77||10 years|
|OCBC FRANK Education Loan||4.50%||2.50%||S$372.86||8 years|
|Maybank Monthly Rest Education Loan (Local)||4.45%||2%||S$372.41||10 years|
|Maybank Monthly Rest Education Loan (Overseas)||4.45%||1.50%||S$372.41||10 years|
|CIMB Monthly Rest Education Loan (Local)||5.39%||2%||S$381.01||10 years|
|CIMB Monthly Rest Education Loan (Overseas)||5.39%||2%||S$381.01||10 years|
Source: Money Smart
4. Start your investing journey
Making smart investments from a young age can build you up for long-term success. Due to its steep learning curve, many seasoned investors today wished they started their investment journey sooner to get ahead with market trends, refine their strategies, and take full advantage of compound interest.
While it does sound like an exciting undertaking, remember to prioritise paying off high-interest debt before taking the plunge in investing. Earning profit from your investments from one end while incurring high interest from your debt is a futile strategy. The amount you owe will continue to compound interest and failure to pay off most debts could result in even more debt, a poor credit score, and even loss of possessions to debt collectors.
For beginner investors, here are the investing basics you need to know — from what to look out for to investment products you can consider.
5. Review your current insurance plans
“I’m still young, why do I need insurance now?” As a fresh graduate, this may have already crossed your mind. You may not see the value of it now, but buying insurance plans at a young age holds an array of benefits for you and your finances. These include building financial stability and confidence, gaining access to affordable annual premiums, and receiving full coverage before any health conditions or illnesses develop in the future.
For starters, consider buying a health or hospitalisation plan to steer clear of any exclusion terms that may arise from deteriorating health in the future. If your parents already have existing insurance plans in place for you, review those policies and figure out how you can manage them as part of the bigger picture of your financial plan.
Here’s an article we cooked up to understand insurance policies for fresh graduates in greater depth.
6. Revel in frugal fun
You’ve put in the hard work in university and now it’s time to start enjoying it. Who said you had to break the bank just to have fun? From enjoying the great outdoors by going on a hike with your friends on the weekend or organising a potluck party with your university mates, having fun doesn’t always have to come at a huge cost.
Spending lavishly can be tempting when you finally receive your paycheck but make it a point to exercise prudent spending and save often while you can.
Graduating from university and entering the real world may be unnerving at first. But where there are financial responsibilities, there are also possibilities. Practice these tips to slowly work your way towards achieving your financial goals, one step at a time.