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Currently a generic guide, by January 2024, it will be available in six customised formats, to meet the needs of individuals at different life stages, such as working adults with young children or those with aged parents.
The Monetary Authority of Singapore (MAS) has launched a Basic Financial Planning Guide to help Singaporeans take steps to enhance their financial wellbeing.
In conjunction with the Association of Banks in Singapore (ABS), Association of Financial Advisers (Singapore) (AFAS), and Life Insurance Association (LIA), the Guide outlines a few rules of thumb, for individuals to start taking proactive steps to address their savings, insurance, and investment needs, as detailed below:
Emergency funds
Set aside at least three to six months’ of expenses for emergency needs.
1. Singaporeans are encouraged to consider keeping money in a combination of:
- Saving accounts
- Singapore Savings Bonds
Protection
1. Obtain insurance protection for:
- Death & total permanent disability: Nine times annual income
- Critical illness: Four times annual income
2. Familiarise with national schemes that you are already covered under:
- MediShield Life for large healthcare bills
- CareShield Life/ElderShield for long-term care in case of severe disabilities
Spend at most 15% of income (after deducting CPF contributions) on insurance protection.
Consider Term Insurance Plans for affordable protection. If you are 55 and above, review your insurance plans every two to three years to ensure they remain affordable.
Investments
Invest at least 10% of income (after deducting CPF contributions) for retirement and other financial goals. Consider:
- For short-term: Singapore Savings Bonds, T-bills, Fixed Deposits
- For long-term: Top up CPF retirement savings, exchange traded funds, units trusts
Legacy planning
Make your will and CPF nomination, and appoint trusted persons. Consider making your:
- Will, CPF nomination
- Lasting power of attorney, Advance care plan
[Refer to the full guide here.]
The guide will be available in six customised formats from January 2024, to meet the needs of individuals at different life stages, including fresh entrants to the workforce, working adults with young children, working adults supporting aged parents, and those approaching retirement.
The National Financial Capability Survey conducted by MoneySense in 2021 found that while Singaporeans generally practise good financial habits in money management, they need to take more active steps in financial planning — more than half of the survey respondents had not even developed a savings plan in preparation for retirement.
Lim Tuang Lee, Assistant Managing Director (Capital Markets), MAS, and member of the MoneySense Council, commented: "The Basic Financial Planning Guide provides Singaporeans with simple and actionable steps they can take to enhance their financial well-being. I thank the industry associations for their support in designing the Guide, and for their continued partnership in using the Guide to advise and help uplift the financial wellness of Singaporeans."
Lead image / Monetary Authority of Singapore
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