At any time, we should stay focus on the importance of protecting our health and income. Firstly, we should ensure that we are covered by hospitalisation plan, e.g. private shield plans offer by many insurers such as NTUC Income, Prudential, Great Eastern. You can use CPF Medisave to pay for the main plan, and you are encouraged strongly to get the rider to cover the deductible and co-insurance with cash payment. Most of my client ignored the importance of getting the rider because they believe that chances of happening is low but i always tell them that accident happens when you least expected it. Are you willing to take the chance to leave your family with financial burden?

Secondly, get yourselves covered with at least one whole-life insurance or limited paying term life insurance and supplement the shortage with term insurance that cover the 30 critical illness (eg. Cancer, heart attack). The coverage required should be about 5-10 times your annual salary. Changing environment and living standards have made us more susceptible to these critical illnesses. Ironically, with the advancement of medical treatment, most of the illnesses can be treated if detected early, though with high medical cost. Hence, we need lump-sum payout from life insurance to help to cover some initial medical assistance required and also to cover the loss of income for 1-3 years when undergoing treatment.

Thirdly, set aside an emergency fund of at least 6-12months of your family expenses. This method of saving will really ensure that in times like this, you are not scared of anything and even open up to more investment opportunities. This is another area that i strongly avocate my client to practise. Money is just like bullet in war. You got to have it when you need to fire.

Only when you have put aside money for the above health and income protection plans should you start to consider accumulating your wealth and enhancing it with higher returns. Since planning for family is not an easy thing, it would be better if there is common financial vision between husband and wife. At least for sure, you won’t end up in a position where one save money and one spend money.

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6. Build your passive income now for the next recession

Only in times like that, people will know the importance of having a passive income. Having passive income can come in many forms. One of the ways is to buy money producing assets such as high dividend-yielding stocks. Market prices for these stocks are very cheap now. If you have the money, it is what you should be spending on. Dividend may be cut in the future but anything above 15 % yield, IE: Reits, is decent enough to keep for passive income.

 7. Shop online!

E-commerce may not be the most popular way for people to shop but it is definitely one of the ways to get the best deals. It’s especially true if you are a woman buying lingerie online. There are many online shopping sprees where customers pool their orders together and an aggregator makes the orders from the merchandiser. This way, they enjoy privileged bulk-purchase prices and share shipping costs. Prices may be 5-30 per cent cheaper. Check them out to see if you can get a bargain while at the same time get unique stuff that are not locally available.

8. Buy only what you need, don’t be upsold

Are you familiar with this phrase: “ How about a cake to go with your coffee, Sir?” Such sales tactic appears when the sales staff at the store attempts to sell you something else on top of your purchases. They are using the technique of upselling to make you buy unnecessary items, oftentimes things that give the sellers a bigger margin. Be firm if you really don’t want to buy. Remember, every dollar counts these days.

9. Review your commitments

Take a look at your monthly bill and cut recurring services if you do not use them. Magazines, Internet services, cable TV premium channels – these are common expenses that keep appearing in your bills month after month. If you don’t use them, cancel them. Having plenty of TV channels would be a waste of money if you are hardly home to watch them. Super-high-speed broadband too is often unnecessary unless you are a professional gamer or need it for work. Downgrading to a medium-speed service will save you a few precious bucks from your monthly bills.

10. Pay yourself first – 10% at least!

Search for an automatic savings plan where part of your pay will be automatically transferred to your savings account. This should clearly be the first rule in your financial planning for nothing is more important than to reward yourself after all the hard work. You work hard to reward yourself, not to pay others in the form of debt. Having such a mentality and plan in place will force you to put some money aside for rainy days such as now and for future investment purposes. This is what I called Emergency Fund which will be able to last you 3-6 months of your expenses.

 As you can see, there are big choices and small choices. Some take a little sacrifice whereas some changes are not noticeable at all. The trick is to save where it doesn’t hurt. Live within your means and always control your spending. Satisfy the Needs before the Wants. Inflation will not only erode your saving but will be a burden to you if you don’t know how to hedge against it.

Nothing beats having the freedom and flexibility to spend. If that is your long-term goal, you need to start saving today.

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