Are we doing the right things when it comes to managing our finances?

Are we doing the right things when it comes to managing our finances? Ask yourself 2 questions to know if you’re on the right track. 

1. Do I have sufficient emergency funds?  

Each one of us needs to make sure we have sufficient funds to meet our daily expenses. Financial planners typically recommend that we set aside emergency funds worth at least six to twelve months of our monthly expenses. This rule of thumb varies among all of us, but the right thing to do is to have more emergency funds if we are less confident of our job security or if we have more commitments and dependents.  

Monthly expenses in this case refer to the sum required to meet the daily basic necessities. The costs of food and transport will likely form a large part of these daily expenses. Besides the emergency funds to cover our daily expenses, we may have plans that require a large outlay in the next couple of years. For those who are preparing to get a home, we will have to plan for the expenses, including the deposits, stamp duties, lawyer fees, real estate agent commissions and as well as renovation – it goes without saying that all these could add up to a hefty sum. If buying a home is something you are planning to do in the near future, set aside some money beyond your emergency funds in a financial product that is relatively safe and liquid, e.g. instant access multi-currency account will be an viable option for investors.   

In iFAST Global Bank, we offer a wide range of currency deposits at competitive rates, with interest up to 4.9% AER. The fixed deposit, on the other hand, pays interest regularly, which is a good choice for those who desire a steady, worry-free stream of income.  

2. What commitments do I have?  

The more financial commitments we have, the more we must ensure our financial plans are in order. For example, for those of us who have bought a property, we must be sure that we have insurance to cover the mortgage instalments in the event that an unfortunate event occurs, e.g. inability to work because of an accident or poor health, ongoing medical treatments or death.  

For parents of young children, there is a need to review your insurance plans, to make sure that there is sufficient coverage in the event that one or both parents pass away. Furthermore, it is crucial to plan for the children’s education costs as early as possible. Endowment plans or savings in fixed deposits have been a rather popular option when it comes to planning for education needs. These plans require the parents to save a sum of money regularly and they will provide a sum of money by the time the child starts university.  

There is an additional element of insurance in the endowment plans too. However, if the parent has a long-term investment horizon and is confident he/she can stick to an investment plan, the other option is to invest into a portfolio, with the aim of beating the returns of endowment plans.   

Fixed deposits can also play a crucial role in financial planning, especially for those who prefer a more conservative approach. These deposits offer a guaranteed return and can be used to build a safety net for emergencies or to fund short-term goals. For example, setting aside a portion of your savings in a fixed deposit can provide a buffer in the event of unexpected expenses or loss of income. Additionally, fixed deposits can be a valuable tool for achieving specific financial goals, such as saving for a down payment on a home or funding a dream vacation. By diversifying your investment portfolio to include fixed deposits, you can ensure a more balanced and secure financial future. 

In iFAST Global Bank, we provide global banking connectivity and convenience to consumers, corporates and financial institutions through accessible products and services. Clients may leverage on iFAST Global Bank to access into fixed deposit in multiple currencies.