When it comes to financial planning, growing individual wealth alone is not sufficient for the long-term. Over time, as you settle down and begin a family, financially planning for your loved ones is what will secure you a truly independent future. In times like these, financial planning – covering aspects from insurance plans to investments – need to be considered on a bigger scale.
Caring for our families often goes beyond the everyday activities – we want to protect their needs and support them. The best way we can do that is to support them financially for things they want to do in the future. Safeguarding the future by preparing for the unexpected is equally, if not more important that simply growing investments. Protecting your family financially is the best way to set a strong foundation for everything else that follows suit.
How can you do so?
Having worked with both corporate and individual entities, our team here at Expat Insurance Singapore are well-versed in the various cases where financial planning has proved beneficial for parties involved. With a quick consultation with our experts, you can map out the steps you need to take when planning your family finances.
1. Start & build an emergency fund for the rainy days
For healthy long-term finances, it is extremely prudent that you put a fixed amount of money – from your salary – into your bank account for savings. Having long-term savings is a common goal we hear many talk about – in fact, you probably already have one.
The same goes for a liquid, emergency fund that is solely for rainy days ahead – and this is especially pertinent advice right now as we experience a pandemic. It is not enough to simply save for future plans – you must also consider the unexpected. Events that aren’t easily financed or supported by any insurance policies you have can occur, and need to be planned for.
How can you develop one?
Understand the purpose of an emergency fund for your family. An emergency fund is one that is easily accessible and well-funded for you in times of need. Ideally, you should be parking 3 to 6 months of your income into it (or more, whatever you deem a healthy amount) that can support you and your family in times of need.
A bigger cushion will definitely be more helpful – if you are able to, and ultimately, it comes down to your lifestyle habits, expenditure and needs. You are the best person to decide what that amount is. What you don’t want to do is to panic in times of need/.
It’s also important to keep your emergency fund separate from your other accounts – long-term savings, current accounts, insurance policies and investments. The thought of planning for an entirely separate emergency account can seem daunting but taking the first step is all you need to grow a healthy amount in time.
2. Protect assets like your home & its contents
According to the Maslow’s hierarchy of needs, having a shelter above our heads is something that is fundamental to our collective well-being. On top of your emergency fund, it is crucially important that you protect your assets, like your home.
Without a comprehensive home insurance plan, you will be leaving your family and/or spouse vulnerable if there occurs any unexpected incidents or events. Many overlook the importance of having their houses insured – a fire or robbery alone can leave you and your loved ones in the lurch, suffering from both emotional and financial damage incurred from unforeseen circumstances.
Luckily in Singapore, HDB owners can rely on the Home Protection Scheme (HPS) to insure them should anything happen. Private homeowners are encouraged to invest in a separate home insurance plan.
3. Reviewing & keeping up-to-date life insurance plans
It is likely that many of us already have life insurance plans but how often do we review them?
If you are the sole breadwinner, have dependents (children, spouse or elderly parents), or even liabilities like a car or home loan, reviewing your life insurance plan is a process you cannot simply neglect. As unfavourable as it can be, planning for how your loved ones can cope in the event of your death is a type of financial plan of sorts.
While you’re reviewing, consider upping your term life insurance policy if possible. The value of a solid life cover cannot be underestimated – it will cover the shortfall between assets and liabilities, as well as provide income for your loved ones after your death.
Likewise, it can be helpful to purchase relevant expat health covers such as critical illness insurance and hospital surgical insurance plans. While the healthcare system in Singapore is top-notch, you want to be able to pay for any consultations worry-free as well.
Avoid these common mistakes when buying term life insurance policies.
4. Working on self-development
You are your best investment for your family.
As routine creeps into everyday life, you can easily become your least priority – and this is an overlooked area that is often ripe with opportunity. Developing and maintaining security and stability is good, but investing in yourself – either personally or professionally – can be fruitful in the long run.
When you put focus, time and effort into professional development, for example, you invite opportunities to grow your income. Often, this benefits both you and your family.
Find out how investing in your personal well-being can develop you holistically. When you do well, they do well!
Finding a way to balance these moving parts while financially planning for your family doesn’t have to be difficult. With our help, you can easily set these gears into motion. See how we can help.