4 smart money moves to make in your 20s

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You have just entered the world of work and therefore you would expect to have a lot of disposable income in your hands.

In reality?

You are already living from paycheck to paycheck.

Now imagine: if money is already so tight, how would you shell out the money needed for your wedding expenses, mortgage, or family expansion plans? Fortunately, being in your twenties means you still have plenty of time to build your wealth! So here are 4 smart money moves you should make ASAP to ensure your future financial success.

Create a budget and maintain a positive cash flow

Net salary 4,000 (S $) Net salary 6,000 (S $) Net salary 8000 (S $)
Necessities (50%) 2,000 3000 4000
Desires (30%) 1,200 1,800 2,400
Savings (20%) 800 1,200 1,600

– Advertising 1-

Your priority should be to maintain positive cash flow. You can do this by creating a budget and, more importantly, staying within your limits. A simple to use budget framework is the Rule 50-30-20, where you spend around 50% of your take-home pay on basic necessities, no more than 30% on wants and at least 20% on savings, investments and emergency expenses.

Do you find it difficult to allocate 20% of your income? Then find ways to reduce your spending on “needs” (for example, switching to a cheaper electricity retailer) and “wants” (for example, reducing the number of parties with your friends) part of your budget. That said, don’t go into penny pinching mode. Your budget is a tool to help you create positive cash flow, not a straitjacket that saps the joy.

Maintain a good credit rating to unlock benefits

Home loan amount (S $) over 25 years Total paid at 1.3% interest rate Total paid at 1.8% interest rate Total paid at 2.6% interest rate
300,000 351,547 372 766 408,302
500,000 585,912 621 277 680,504
700,000 820 276 869 789 952,706

Your credit score is a 4-digit number that ranges from 1,000 to 2,000 (with AA rating of 2,000 being best) – and is an aggregation of your credit history with different banks and financial institutions. Banks and other lenders use your credit score to gauge the likelihood of you going into default. In general, the higher your credit score, the more likely you are to negotiate a larger loan amount, get it faster, and at better interest rates.

By doing the math, if your mortgage interest rate were 2.6% instead of 1.3%, you would end up paying S $ 94,592 more for an outstanding S $ 500,000 home loan. with 25 years remaining. Thus, emphasizing the importance of build a good credit rating in their twenties. To do this, you will need to pay all of your debts on time, limit your number of open credit facilities, and minimize inquiries about loan applications.

Build an emergency fund to save in case of uncertainty

a emergency fund is a sum of money set aside for accidents, sudden injuries or unexpected loss of income. Start building your emergency fund while you are still in your 20s; it helps create a financial reserve that can keep you afloat in times of need without resorting to credit cards or high interest personal loans.

How much should you have in an emergency fund, however? A general rule of thumb is at least 3-6 months of living expenses (note: this is the “need” portion of your monthly budget).

Invest in the right insurance to secure your financial future

The next step that you should take is to purchase a suitable insurance plan, so that you can rest assured that your loved ones will not be faced with a pile of bills if something untoward (for example, an illness in the phase terminal or death) happened to you.
But with so many insurance plans available, how would you know which one to choose? If there is anything the pandemic has taught us, it would be this: Financial flexibility is a must. And that’s where Tiq Easy Save by Etiqa Assurance really shines. This unique insurance savings plan includes:

  • High borrowing rates: Take advantage of a guaranteed lending rate of 2% per year for the first 6 years to optimize your savings and achieve your financial goals.
  • Short-term premium: Tiq Easy Save has a premium payment of 1 or 2 years. If you make an initial lump sum payment, you get 1.5% off your one-year bonus amount.
  • Free Partial Withdrawal: You can make partial withdrawals at no additional cost in certain circumstances.
  • Death benefit: Tiq Easy Save offers a death benefit of 101% of the value of the account on the death of the insured during the term of the policy.

What are you waiting for? Get the assurance of life protection with bigger savings today! Conditions apply.

These policies are underwritten by Etiqa Insurance Pte. Ltd. (company registration number 201331905K).

As the purchase of a life insurance policy is a long-term commitment, early termination of the policy usually involves high costs and the cash value, if any, payable to you may be zero or less. total premiums paid. You are recommended to read the Product Summary, Policy Illustration and Policy Document for the exact terms, specific details and exclusions applicable to this insurance product which can be obtained from any our product distributors; and seek advice from a financial advisor before deciding whether or not to purchase the policy. In the event that you choose not to seek advice from a financial advisor, you should consider whether the contract is right for you and meets your needs given your goals, financial situation and specific needs.
This content is for reference only and is not an insurance contract.

You will find full details of the policy terms and conditions in the policy contract.

This policy is protected by the Policy Owner Protection Program administered by the Singapore Deposit Insurance Corporation (SDIC). Your policy coverage is automatic and no further action is required on your part. For more information on the types of benefits covered by the plan as well as the limits of coverage, if any, please contact us or visit the website Life Insurance Association (LIA) Where SDIC websites.

This announcement has not been reviewed by the Monetary Authority of Singapore.

The information is correct as of September 30, 2021.

The article 4 smart money moves to make in your 20s originally appeared on originally appeared on The ValueChampion blog.

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