Planning your family’s finances can be a daunting task. But it’s necessary, especially if you don’t want to keep borrowing money from even the best money lender Singapore. Good financial planning is key to a good life for your family.
With that, here are the things you should and should not do when planning for your family’s finances. Let’s begin with the things you need to do.
Plan for your children’s education
One important aspect of life for many people in Singapore is their children’s education. If you want your kids to attend the best schools, you have to be financially prepared to foot the bill. Early on, do your research on the costs of schools you want your children to attend. It would also be wise to plan for tertiary education as well, as colleges and universities entail significant costs. It’s not just tuition, but transportation, accommodation, and other living expenses as well.
If your children plan to go to medical or law school, costs also tend to be high. Thus, it’s a good idea to start saving as early as possible for your children’s educational needs.
If you’re inclined to it, you may purchase an endowment plan to help secure funds for your children’s tertiary education. These plans include both life insurance and investment components, which means the money you put in will grow over time. The earlier you begin, the more money you may have when the time comes for your children to go to university.
Invest for the future
Investing is one of the best ways to financially prepare your family for the future. What your investments will earn can help fund your children’s university education, your retirement, and even leisure activities like overseas travel.
Choose investments that are legal, legitimate, and well-recommended by most licenced financial advisors. Stocks, savings bonds, real estate investment trusts (REITs), and exchange-traded funds (ETFs) are examples of popular investment vehicles in Singapore.
Take advantage of tax reliefs
There are many legal ways of reducing the taxes you owe in Singapore. For example, you may choose to top-up your CPF contributions regularly, as they are tax-deductible. It’s also a good idea to put money into your SRS (Supplementary Retirement Scheme) – contributions to the SRS are also subject to tax relief.
Parents, in particular, are entitled to a number of tax relief programs, such as:
- Working Mother’s Child Relief
- Qualifying Child Relief
- Parenthood Tax Rebate
The tax savings you can get when you combine these benefits can be tremendous. With that, you can use that money for your retirement funds, health insurance, or your children’s education funds.
Maximize your CPF benefits
Get to know how you can use your CPF for things like healthcare, housing, and retirement. As mentioned, you can regularly top-up your CPF to benefit from tax relief.
Now, let’s go over to the things you should not be doing.
Neglect estate planning
You should have a clear agreement in writing how you want your assets to be shared among your children in the event of your passing. Without proper estate planning, the terms of the Intestate Succession Act will apply. With that, your properties may not be distributed in a way favourable to each of your children.
Rely on CPF alone for retirement
CPF Life can certainly contribute a significant sum of money for your retirement, but it may not be enough. Especially if you want to live a comfortable life as a senior citizen, you need to find ways to add more to your retirement fund.
Overcommit to property loans
Interest rates on property loans may vary over the tenures of the loans. Avoid overcommitting as you may face financial trouble later on.
Instead, choose property loans with more reasonable terms. Remember, you can always walk away from loans with terms that make you uncomfortable or doubtful.
Neglect to acquire health and disability insurance
The costs of medical care in Singapore tend to be quite high, so MediShield Life may not cover all of your medical bills. It pays to also have an Integrated Shield Plan for additional coverage.
Conclusion
Creating a financial plan for your family is not a walk in the park. You have to consider many things, like your retirement, your children’s education, and your regular family expenses as well as other things that may arise in the future. With that, these dos and don’ts should serve as a guide to making sure your family stays financially secure.