5 Big Money Milestones to Hit in Singapore Before You’re 30

Starting out on our financial journeys after we graduate, or when we first enter the workforce, the barrage of information that we receive can be overwhelming.

However, it doesn’t have to be all so intimidating for us. And even those of us who are more advanced in our careers, we can sometimes not have good habits instilled when it comes to our financial health.

Well, building a good framework – that takes into account key goals – can be the first big step. So, here are five big money milestones to hit in Singapore before you’re 30…or if you’ve started your journey a bit later, then 40!

1. Be debt-free (excluding housing) 

If you can avoid being free of debt (excluding any mortgage for your primary property) then that’s a great start. That’s because debt, if we look at the credit card type or personal loans, can be one of the biggest impediments to us growing our wealth over the long term.

Why? Just look at the insane interest rates on outstanding debt for any credit card and it becomes obvious – anywhere from 22% to 29% per annuam (p.a.)! Same goes for personal loans. 

Avoiding debt entirely is difficult – particularly if you’re saving for your first home – but with credit cards and personal loans, it’s clear we should staying well away from them.  

2. Have an emergency fund

When we start working, and before we start investing, we should be saving up an “emergency fund”. This is for those unforeseen circumstances – such as the loss of a job or an emergency medical expense.

The conventional wisdom is to save between three to six months’ worth of our expenses (to live, not for holidays etc.) in cash but in this environment it might be better to aim for a higher amount 

Indeed, many people aim to save an emergency fund of six to 12 months’ worth of expenses. Remember, we should be putting this emergency fund in something low to no risk that can still earn us a yield, such as a money market fund (MMF) or fixed deposits.  

3. Buy insurance 

The younger we buy term life insurance or basic health insurance (when we’re young and healthy), the lower our premiums will be in the future.

So, it’s worth getting on a basic insurance plan and paying your monthly/yearly premiums so that you can set yourself up for lower premiums later in life – when you’re much more likely to need insurance. 

Whatever you do, though, keep insurance and investing separate. That means avoiding investment-linked policies (ILPs) at all costs.  

4. Start investing

If we haven’t started investing, it’s worth looking at putting our long-term money to work. The earlier, the better as that whole saying of “time in the market, not timing the market” is so true.

Starting out, it’s best to keep it simple and invest into low-cost, diversified exchange-traded funds (ETFs), many of which can outperform unit trusts (which carry high management fees).

Allocate accordingly based on your risk appetite but the key thing is to just start.

5. Automate savings

Finally, we should aim to automate our savings by “paying yourself first” every month when your salary is credited to your account.

By automatically putting a certain percentage aside for savings (maybe for building your emergency fund) and investing, we can automate the whole process.

Doing this also removes the temptation to spend that money straight away and means we won’t have the issue of only investing with what’s left at the end of the month.

Setting goals, sticking to them and then automating the whole process will give us a great foundation for financial success later in life.