How To Spare Yourself From Money Scares (Because, Halloween!)

|Posted by | Debt Management, Retirement Planning

woman scared by financial situation

With Halloween just around the corner, here’s how to make sure your scares are of the supernatural – not financial – variety.

Like the best phantoms and boogeymen, money scares can sneak up on you when you least expect it — and it can be pretty terrifying when you’re desperately short on funds. But unlike dealing with supernatural entities, there are concrete measures you can take to prevent this from happening to you. Read on for a list of common money scares, and how to make sure they stay hypothetical.

office ladies working

Losing Your Job

In a volatile economy like ours, an iron rice bowl is rarely a guarantee. If you’ve been catching up on the news, you’ll know that several big players in the industry have recently cut jobs.

Never be so complacent as to assume this won’t happen to you, and save 30 per cent of your salary every month to prepare for unexpected situations like this.

If you’re really unfortunate to be cut from your job, you could be jobless for six months or more while you hunt for a new gig. If the economy is bad, factor in even more time for that possibility.

Even if you’ve received layoff benefits, it’s still important to have enough liquid savings as a backup.

You never know how long it could take before you land a new job. Sometimes you have other commitments to worry about concurrently, such as providing for your family or contributing to the household.

travel scared credit card

Something Bad Happens on Holiday

When it comes to travel insurance, there are basically two camps of thought: Folks who think that it’s essential, and others who think it’s only for the paranoid.

The thing is, no one is going to tap you on the shoulder to forewarn you that something bad is going to happen. And you don’t want to be caught off-guard when it happens at a time when you’re away in a foreign land with few resources.

Be it the airline losing your luggage, getting robbed, an accident or even a terrorism-related incident happening, there are a lot of probabilities when it comes to things that could go wrong.

Insurance cushions the blow because you don’t have to dip into your own funds to resolve the issue. Medical emergencies in particular, can be exorbitant in a foreign land, be it hospitalisation charges or medical evacuation to be flown back to Singapore.

Travel insurance pays for your peace of mind when you’re having fun, and you can choose a credit card with complimentary travel insurance to get yourself covered in a pinch.

However, if you’re buying your own plan, choose a reputable insurer and don’t automatically opt for the cheapest package – it may not provide comprehensive enough coverage when something untoward happens.

overdue credit card bills

Unknowingly Getting Into Debt

How does one unknowingly get into debt, you say? It’s entirely possible if you’re not vigilant with the flow of your money.

One common example is only paying the minimum amount on your credit card bills, which leads to snowballing of your debt, which is then made worse when interest rates are added.

Even worse, you own a whole bunch of credit cards to enjoy the various benefits each bank offers, and can’t keep track of the payments on each one.

Another example is taking a personal loan on top of your other loans like a student, car or mortgage loan, which you then find yourself struggling to pay back. After all, personal loans have among the highest interest rates among various bank loans.

Avoid such headaches by only spending what you can afford. You should be able to pay your credit card bills in full every month, otherwise it’s a sign you should cut back.

person who ran out of cash

Not Enough Retirement Savings

In Singapore, our retirement needs are mainly covered by our CPF savings, especially if we have a full-time job which equates to regular contributions to CPF.

But that doesn’t mean we should just leave the money there. We should still work hard now to build up our CPF savings.

One straightforward way is to transfer money into your Special Account under the Retirement Sum Topping-Up Scheme with cash or CPF savings, as it pays high interest rates of 4 per cent per annum.

For many of us who are using our Ordinary Account to service a mortgage loan, consider using your savings to pay part of the monthly loan payments instead, especially if your monthly payment is on the high side.

This way, you won’t max out your CPF housing withdrawal limit at the point when you’re approaching retirement age. You really don’t want to have to dip into your savings to service your loan just when you’re planning for a slower-paced life.

Money in your Ordinary Account also earns you higher interest rates of 2.5 per cent per annum, as compared to many bank accounts.

That said, don’t completely rely on what’s in your CPF account for your retirement needs. With the standard of living skyrocketing the way it is now, in the future what you have in CPF may no longer be enough to enjoy the standard of living you’re accustomed to.

Read This Next:

How to Start Saving for Retirement at Age 50
Common Money Mistakes You Make Upon Retrenchment

Alexa FangBy Alexa Fang
Alexa is a pop-culture vulture. She lives to read, write and travel, and decided long ago that life is stranger than fiction. When she’s having croissant, she thinks in French. “31 Rue Cambon” is her favourite address, and she believes that money one enjoyed spending is never money wasted.