The Truth About 3 Personal Finance Questions That Singaporeans Are Always Asking
Singaporeans are among the most stressed out citizens in the world. That’s because we have so many things to worry about, especially when you are living in one of the most expensive cities in the world. The top worry that bugs Singaporeans the most is definitely personal finance. Questions like “Am I earning enough?” and “Can I retire comfortably in 20 years’ time?” are constantly on our minds.
To help you and I tackle personal finance and alleviate some of your stress, we will be analyzing 3 the most common personal finance questions that are always on Singaporeans’ minds. Make sure you are taking down notes to the answers for these common personal finance questions.
Question 1: Do I Need Insurance Or Can I Save It For Something Else?
Some of us are reluctant in spending money on insurance. Why? That’s because you end up paying for insurance without getting anything in return under most circumstances.
After all, insurance only allows you to make claims in specific situations specified in your policy, i.e. death, total and/or permanent disability (TPD) or diagnosis of critical illness (CI). Thus, it is no wonder why you are questioning the need for insurance when we have the option of saving some money on the insurance premium for something else instead.
But if you take a step back, you might find a convincing answer to the question. By spending a small percentage of your income, you get to protect your financial assets for your loved ones for a good number of years. It is a small price to pay for the protection you are receiving in return. In the unfortunate event that you end up in an accident or get diagnosed with CI, your family won’t have to worry about being saddled with an unsurmountable debt.
Verdict: Don’t scrimp on your insurance. Rather, make sure that you are maximizing your dollar by spending the right amount on insurance.
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Question 2: Should I Buy A Car Or Take Cab/Public Transport?
Owning a car in Singapore can cost you anywhere between $70,000 to $100,000 for an average sedan car. It is no wonder why Singaporeans are thinking twice when deciding whether to buy a car. After all, buying a car is one of the most expensive financial commitments you can make as a Singaporean. Not only will you need to fork out 50% (~$50,000) of the car’s value as down payment, it will leave you an extra $50,000 in debt for up to 7 years.
Alternatively, if you don’t buy a car, you can opt to take a mix of cab/ride hailing cars as well as public transport. Interestingly, the cost of taking cab/ride hailing cars to (and from) work every day is still 20-30% cheaper than owning a car! Although this does not take into account the possible price surge during peak hours during the work week, the idea of having someone chauffeuring you around still sounds much better.
Verdict: Buy a car only if it becomes a necessity for your work (e.g. If you are a salesman who needs to constantly travel to meet clients)
Question 3: Do I Really Need To Add To My Retirement Savings When I Already Have My CPF?
Every Singaporean knows that CPF is synonymous with retirement to the extent that some of us rely solely on CPF for retirement. While CPF is a good system that “encourages” us to save for retirement, is it really enough for your retirement?
Well, that depends on what kind of retirement lifestyle you are aiming for. If you are aiming for the basic retirement lifestyle, then you don’t have to worry about not having your own retirement savings on top of your CPF.
|Basic Retirement Sum||Full Retirement Sum||Enhanced Retirement Sum|
|CPF Savings Required||$90,500||$181,000||$271,000|
|Daily Receivable Amount (based on Standard Plan)||$28||$52||$72|
However, if you are looking for anything more, then your CPF isn’t going to provide you enough for your retirement. Even with the Enhanced Retirement Sum, you are just getting slightly more than $70 a day. After covering your daily expenses, you won’t have much money left for your once-a-month holiday trip.
Verdict: If you are looking for more than a basic retirement lifestyle, you definitely need to add to your retirement savings.
Looking for a retirement plan to enhance your retirement savings? Check out 3 of the best retirement plans in Singapore right here.