Importance of Emergency and Opportunity Funds

Today is the last day of year 2012. I am happy to note that I managed to build up my personal Emergency Fund that allows me and my family to survive without my income for six months.
It took me more than two years to save up this amount of money. This is because I had used up all my personal savings for my wedding last year. In addition, I am also the sole-breadwinner, had a baby girl and owns a car. Therefore, it took me quite some time to save up this amount of money. My partner and myself decided that we would only dip into fund when I lost my job or faced a personal finance crisis. Henceforth, we put the fund into a fixed deposit.
SG Wealth Builder
SG Wealth Builder

I always encourage young people who just entered the workforce to build up their Emergency Fund as soon as possible. Life is always unpredictable. You never know when you will lose your job or encounter personal finance crisis.

Having an emergency fund can help to provide short term security against market uncertainties. It allows you and your family to carry on life as per normal whilst you embark on the recovery journey. Without this sum of money as interim support, you have no choice but to borrow from friends and relatives. Personally, I don’t like to, and have yet, to borrow from my friends and relatives.
Of course, having this Emergency Fund is only one of the key elements of my personal finance. It would not help to enhance my wealth nor elevate me to another wealth level. To me, it is just another “shield” or protection for personal finance. My next course of action is to build up my Opportunity Fund – war chest for investments and business
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Importance of buying insurance when you are healthy

As 2012 is coming to an end, I am reviewing my financial health status. I got married last year and this year my baby girl was born. Therefore, one of the outcome of my review is to purchase the Aviva SAF Group Term Life Policy. I think it is one of the most value for money term policies in Singapore. For as little as S$4.21, applicants can be insured up to a maximum coverage of $1000,000. Of course, only NSFs, NSmen and personnel working for MINDEF are eligible for this policy.

The need to have adequate insurance cover really hit me hard twenty years ago when I was in secondary school. My dad, who was the sole breadwinner, suffered from stroke then and was unable to work. My family lost our sole income and to make things worse, my dad did not purchase any insurance covers. As a result, we went through a period of financial hardship. On hindsight, if my father had bought any life insurance policies when he was healthy, our family situation would definitely be better.


It is important that you insured yourself for the correct amount of protection. In addition, it is important that you buy the correct policies. I know it might sound hollow to you as I am not a financial advisor, but then again, my guiding principles on buying insurance policies is solely for protection. I see no point in buying whole-life, investment-linked  or endowment policies. These policies cost so much premiums but provide very limited coverage. Henceforth, I would only purchase term policies which provide large coverage for little premiums. When I was young (19 years old), I was sold expensive whole-life insurance policies and I only realized my mistake a few years ago. By then, the damage has already been done

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Year end bonuses

It is that time of the year when salaried workers collect their year end bonuses. A couple of weeks ago, the government had also declared 13th month and 0.70 month variable bonuses for all civil servants. With the world economy still in the doldrums, I believe most Singapore workers’ year end bonuses would be modest, in view of anticipated moderated growth for Singapore economy.

This year will be the 7th time I am collecting year-end bonuses. I will be receiving 2.5 months of bonuses, excluding 13th month. The amount is not big, but substantial enough for me to settle my renovation and insurance loans. I also intend to set aside some money for some investments and my baby’s endowment plan. I targeted to settle my car loan by next year-end, using next year’s bonuses. With that, I would only need to worry about my housing loan.

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It is important for me to settle these loans as soon as possible as I am currently the house hold sole breadwinner. For those in the same situation as me, you would understand the pressure I am facing. On looking back, this period marks an important milestone for me as I embark on my wealth journey toward financial freedom. It has not been an easy ride but I am glad to have overcome this challenging chapter of my life.

Most Singaporeans had already made plans on how they are going to use their bonuses. Some planned to go for overseas holiday while others planned to buy big-ticket items like car or house. My advice for those who had just started out working is to exercise financial prudent and use your bonuses to pay off your study or any other loans. The interest incurred, especially for credit cards. can be scary if you keep rolling

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