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Financial Tips for Fresh Graduates in Singapore

Have you just graduated from college and are about to start your journey in the corporate world? If yes, congratulations on achieving this important milestone. But all is not as rosy as it seems.

The real struggle with finances will reveal itself only when you realise that earning money and managing it are two completely different things. Many young adults in Singapore who are just out of college struggle to handle their money in a wise way. By the end of the month, they are knocking on the doors of their parents or looking for other ways to get by.

It is quite exciting to get your first paycheck, but the excitement will fade away quickly as you are likely to be burdened by financial responsibilities such as your wedding, purchasing your own home, and more. Although these may not be immediate concerns, they’ll creep up on you soon enough.

So, it is always better to start planning your finances early in your career. To help you out, we are listing out a few tips that can go a long way in making sure you not only save money but also build wealth at a young age.

Pay Your Credit Card Bills in Full

Credit cards are fun, they’re exciting, but they’re also dangerous if you don’t use them wisely. Considering that they attract interest which is compounded at the rate of 24% p.a. you would do well to learn to use it judiciously.

Make sure you pay your credit card bills in full and on time. A mounting credit card bill will only escalate your debts. Make sure you’re always aware of what you’re buying and whether you can afford it or not. Credit card debt is a vicious cycle that can suck the joy out of earning income. Why add to your stress when you’re just starting your career?

In addition, it might have an adverse impact on your credit score and affect other significant decisions of your life like purchasing a new home and getting loans. So, having some sort of financial discipline early in your career is a good practice to develop.

Understand How Much You Are Saving in Your Central Provident Fund

A person earning his/her livelihood in Singapore cannot avoid knowing about the money getting accumulated in his/her Central Provident Fund account. It is always ideal to know about the various types of CPF accounts which are meant for different purposes such as healthcare, housing, education, and more as soon as you join the workforce.

You must understand the nitty-gritty of this compulsory savings scheme offered by the Government of Singapore and how you can use it based on your overall personal financial situation.

Create an Emergency Fund

Whether you have any current financial obligations or not, it is always good to create an emergency fund. When you set aside additional funds for any emergency and keep adding to it over time, you will be better prepared to face uncertainties in the future.

Such funds can also come in handy when you face uncertain times like unemployment or when you have to pay for unexpected medical expenses of a family member. Try to save six months of your salary and keep that amount as a buffer.

For instance, you can start by saving 15% of your monthly income every month. And when you have collected six months worth of your salary, you won’t have to worry much even if you lose your job or some other emergency comes up. You may not be able to save much when you are early in your career, but it is a good practice to develop.

Make the Most of Discounts, but Only if You Are Well Aware of its Utility

When you wish to purchase groceries and other items of daily use whether online or in-store, you may be enticed to use the attractive discounts on offer. However, you must be careful and understand how discounts work. Not every attractive offer you will be useful to you. You might end up purchasing sub-standard goods or things that you do not actually need.

Always be sure of what you’re purchasing. Understand the product’s use and make a decision on whether it will be useful to you instead of buying it just because it’s cheap.

Purchase Health Insurance as Early as You Can

Often, we think that an insurance is needed only when you have a family of your own, but young graduates should get at least a health insurance as soon as they join the workforce as it has numerous advantages.

Taking a health insurance policy is important because, without it, you may have to give up your savings if you are faced with a medical condition. The right health insurance plan can reduce any health-related risk if anything happens to you that prevents you from pursuing a successful career.

Don’t Compare Your Earnings With Another’s

In Singapore, there are all sorts of professionals. Some property agents earn close to S$300,000 each year while others slightly less.

Being a young graduate, you must avoid thinking that you have to earn as much as they d, within a short span of time. It is very important to understand that earning a lot takes time, effort, and perseverance.

In order to earn well in your profession, you may have to work hard and gain experience. You must have the patience and the ability to work your way up to the top which cannot happen overnight.

Start Investing Early Even if You Start Small

When it comes to investing money, there is no such thing as the right time. Fresh graduates who just received their first paycheck are in the most advantageous position, as their earning potential is the greatest considering that they have their entire career in front of them.

In fact, you do not even need a degree to invest your money. With the right financial advice, you will be able to build your wealth that will prove to be beneficial in your long-term financial planning as well.

Keep in mind that every investment carries certain risks with it. You may not always succeed, but the important thing is to invest wisely using expert advice.

The passage to financial freedom is a long, drawn-out process and not a 100-metre dash. If you plan well, half the battle is won. As a fresh graduate, it’s easy to get sucked into the cycle of lavish spending especially when you have this new source of income and also because all your other friends may be doing the same thing. But be wise and use your money well. You’re working for it after all. Financial discipline can go a long way in bettering your career and improving your standard of life.

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