Don’t squander away your circuit breaker savings. Learn how you can be more financially responsible so your future self will thank you!
If you’ve managed to save a pot of money during the time when everyone’s stuck at home with nowhere to go, give yourself a pat on the back.
Below, we’ve gathered the five best things you can do with your circuit breaker savings. Take a step in the right direction and start growing your money for your future.
#1 Channel it towards debt repayment
If you have mustered up some savings but are still currently dealing with high-interest, compounding debt such as credit card debt, the first thing you should logically do is to get rid of debt even though that doesn’t sound all that exciting. Here are some debt-clearing strategies to help you get back in the black.
Remember, there’s no free loan in the world — the longer you remain in debt, the more money you’ll lose as compounding interest is an exceedingly slippery slope. The sooner you settle your debt, the better.
#2 Make your savings work harder
Don’t have any debt bogging you down? Then make your savings work harder for you by parking it in a high yield savings account.
For the uninitiated, the banks’ regular savings accounts only offer a meagre 0.05% p.a. interest, so a savvy move would be to move your funds to a high yield savings account to power up your emergency fund with minimal effort on your part.
#3 Start investing
Like it or not, investing is the new saving. Investing has its place in anyone’s life as it helps to steadily grow one’s wealth over time to meet long-term financial goals. To take advantage of the magic of compound interest, you’ll need to start investing as early as possible and — equally important — stay invested.
Not sure how to start investing? You’ll first need to open a Central Depository (CDP) account as well as a brokerage account. The latter lets you buy and sell investment products.
Read up and do your homework before plonking down your savings into investment products — it is of utmost importance that you know what you’re doing with your money, especially if you want to DIY and create your own portfolio.
When it comes to investing, consumers certainly have more options today compared to a decade ago. For example, a robo-advisor can help automate your investments while a regular savings plan works on the premise of dollar-cost averaging, which takes away the difficulty associated with ‘timing the market’. Contrary to what many investment newbies may think, you don’t even need much capital to start investing.
#4 Fund a course or two
Do you live by the mantra ‘never too old to learn’? Good on you! Lifelong learning is always worthwhile practice, although it isn’t necessarily the easiest or most convenient.
If you have spare cash on hand, definitely consider using your savings to upskill via a course or two. Ensuring that your skills are up to par and relevant in the constantly evolving job market will help to future-proof your job.
#5 Plan for retirement
It’s never too early to start planning for retirement even though you may just be in your 20’s or early 30’s. If you don’t have other urgent financial commitments at hand, now could be the perfect time to start the ball rolling.
As it stands, new studies released have shown large retirement savings gaps in Singapore and why many people regret not saving earlier.
The ability to secure a steady stream of retirement income hinges on the decisions we consciously make today. Definitely check out retirement annuity plans for a start. Depending on the type of plan you choose, you could be enjoying a monthly payout for a fixed number of years or for life. In exchange, you would have to pay a monthly or single premium for a fixed period during your working years.
Treat yourself to something nice
While you’re busy making your money work hard for you, you’re free to also use a fraction of your hard earned savings to treat yourself to something nice. This could be anything from a relaxing spa session or staycation to a meal or two at your favourite fine dining restaurant. You definitely deserve it!
Besides taking steps to grow your wealth and be in a better place financially, make sure you’re sufficiently insured. After all, life is unpredictable. Consider necessary medical expense insurance and term insurance to protect you and your loved ones from disability, death or a medical crisis.
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