Why understanding personal finance is more important than ever

According to Ms. Tan, we can strengthen our financial literacy in three main areas, which should be done in sequence: Budgeting, saving and investing.

1. Budget

The first step to successfully managing our money is tracking our monthly expenses and setting a budget.

“Tracking your expenses gives you an idea of ​​what you’re spending and highlights areas where you’re spending too much,” said Ms Tan. “After that, you make it easier to set budgets for different spending categories and get more control over your money.”

2. Save

With the budget down pat, it’s time to start thinking about savings. Ms Tan points out that saving for rainy days is especially important: “Having enough savings can tide us over in unexpected and difficult situations such as evictions, health crises or the death of a loved one.” one.”

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Knowing how much to save is also important. According to Ms Tan, saving enough to cover at least three to six months of expenses is a good guideline, with an increase of 12 months for those with unexpected income, such as workers. gig.

As the saying goes, if you take care of the money, the pound will take care of itself. Savings accounts such as the DBS Multiplier Account and the POSB Save-As-You-Earn Account can help contribute to your nest egg by rewarding you with higher interest rates. upon meeting certain conditions, such as reaching the account’s regular monthly deposit limit or your monthly salary.

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3. Investment

Once you’ve got enough emergency savings, it’s time to put more of that money to work by investing. One of the biggest benefits of investing is that over time, it can help mitigate both longevity and inflation. According to Ms. Tan, it is important that you understand your financial situation, goals, ambitions and the types of investment products available before you start investing.

“You can start small with a regular savings plan like DBS Invest-Saver where you set aside a fixed amount each month to invest in exchange-traded funds and/or unit trusts. Using a robo-advisor like DBS digiPortfolio is an option for investors who want investment advice at a reasonable cost*, along with a structured investment portfolio, “he said.

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In the current climate of economic recession, inflation and rising stock market prices, some investors tend to ‘the “flight to safety” approach, said Ms Tan. “With the growth of its products, low-risk investment options such as fixed deposits, Singapore Savings Bonds (SSBs) and bills have become a popular choice among retail investors who wish to diversify their portfolios.” Treasury (T-bills).

In addition to incorporating these three concepts, it is important for people to do their own research regularly. After all, financial literacy is a lifelong journey. Ms. Tan said: “Everyone’s goals and circumstances are different, which requires specific approaches and solutions.”



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