Remember 2020? It was a challenging year, especially for parents with young kids. You had to keep everyone safe and financially afloat during Covid-19, juggle home-based learning with work-from-home, struggle to stay employed amid the global recession (or find a job), and of course, there’s the new normal that we’re still getting used to.
With such cray going on in your life, who had time for diet and fitness plans, let alone money management? In 2021, it’s time to ride the Ox by the horns so that we can get back on track as quickly as possible!
One great tool that can help is POSB NAV Planner, a free yet comprehensive tool that can be accessed via your POSB digibank. Now, with the added capabilities of SGFinDex, which seamlessly consolidates your financial information (with your permission) from banks, CPF, HDB and IRAS for a more holistic view of your money, POSB NAV Planner is even more powerful in its ability to assist you with money matters.
Find out how you can stay on top of your game AND plan ahead or manage your finances well with POSB NAV Planner.
FOR THE PRESENT
1. Get a good overview to stay afloat each month
POSB NAV Planner has a Money In & Out (MIMO) feature, which helps you keep track of the money that comes in (i.e. salary, dividends, interest, transfer-ins), and the money that goes out (i.e. transport, investments such as a Regular Savings Plan, transfer-outs, food, credit card payment, bills, insurance, etc).
The simple rule of staying afloat: Your Money Out cannot be more than your Money In.
Else you’ll kena a deficit. Or you’ll need to dig into your hard-earned savings or even your child’s pocket money *gasp!* What you shouldn’t be touching: Your child’s education, a rainy day/emergency fund or retirement nest-egg.
Once you can generate a positive balance every month, channel the extras into savings, investments, retirement and so on. With SGFinDex, once you connect your other financial accounts, this MIMO feature can function like a control panel of your various bank accounts and other financial transactions.
Goh Hwee Koon, MoneySmart’s Content Editor, is a fan of POSB NAV Planner. Having 2 kids aged 6 and 12 in the household, it’s important for her and her husband to ensure that family finances are healthy and that their children’s future education is planned for.
She says: “I used to wait till I received my bank statements to get an update on my finances. But with POSB NAV Planner’s SGFinDex enhancement, I can now consolidate all my financial information in one place and view them at a glance. I also like that I can skip multiple logins to my other accounts and can simply access my information in one place easily and securely.”
2. Scrutinise and cut unnecessary expenses
Another feature of MIMO within POSB NAV Planner is that you can see how your money is spent in broad categories such as dining, bills, utilities, taxes, and transport, and if they are over-budget.
With POSB NAV Planner’s MIMO feature, you can also check on your financial ins and outs for the past 6 months, so there is a historical record or trend of your spending patterns/habits.
Notes Adrian Yuen, MoneySmart’s Group Head of Content Services and doting dad to a 2-year-old girl: “One aspect of digital banking that’s really changed my life for the better is the ability to track my expenditure very specifically. Every payment or transfer is logged. POSB NAV Planner took it further for me, by automatically tracking categories of expenditure like dining or shopping, and I love that.”
Especially for busy parents, once you’re able to zoom in and assess how much you are spending and on which categories, it’s easier to plan/streamline expenses to balance your MIMO.
Some areas of concern and possible solutions (yes, we’re all guilty of this when we’re rushing or too busy/lazy):
- Spending too much on cab rides — try to leave the house earlier or minimise your responsibilities/appointments
- Dining out too much/ too dependent on food delivery — with some careful planning or cooking your own meals, it’s possible to shrink your family’s food budget
|Why set a budget?
By setting a budget, you’ll be able to achieve a positive MIMO each month, building up savings for your emergency fund, financial goals, and future planning such as protection (medical bills can be sky-high!) and investments to grow your money. This is something that simply living from paycheck to paycheck will not achieve.
3. Do you have enough emergency savings?
One should typically aim to set aside enough money to last at least 6 months in case of emergency situations such as suddenly needing money to pay medical bills or an urgent essential lump-sum payment; or being unemployed/retrenched or unable to work (the emergency fund ensures your family can still get by while you look for a new job or recover).
The rule of thumb is generally 3 to 6 months of your monthly expenses (as seen on POSB NAV Planner). If you’re a gig economy worker / freelancer, the recommended amount is 12 months of emergency funds.
The beauty about POSB NAV Planner, now supercharged by SGFinDex, is that it gives a great summary of your emergency savings progress, and can even help you project how long it can last or if it’s sufficient for your needs. SGFinDex gives you an accurate view of your emergency savings by incorporating the cash deposits that you have with other banks.
The emergency savings feature in POSB NAV Planner also provides insights into projection rates for your cashflow (salary growth rate, inflation rate) and asset growth rates (which includes your Supplementary Retirement Scheme, Central Provident Fund Ordinary Account, investments, and cash). You can also add in your dependents, and have the flexibility to edit your cash savings and expenses for even better accuracy.
FOR THE FUTURE
1. Be prepared for your child’s milestones
Once you’ve gotten your day-to-day finances down pat, it’s time to plan ahead and be financially prepared for the future.
Another cool feature of the POSB NAV Planner is Map Your Money. No, it’s not an ancient treasure map to a literal pot of gold — but we’ll say the effect is quite similar!
This feature allows you to set money goals for various milestones such as your kid(s)’ university education and so on. With Map Your Money, when you set money goals, you can also see how it impacts your future cashflow and/or your financial freedom goal (YAAAS, early retirement!).
Adrian shares: “My wife and I have a joint POSB account that we use to store and deploy payments related to our 2-year-old daughter. Additionally it helps us visualise the goal of saving enough for her university education.”
In addition to setting your money goals and projecting future cashflow, Map Your Money also helps busy young parents with their blind spots — it can anticipate potential gaps and offer suggestions for you to take action to plug these gaps. For example, having enough insurance coverage to deal with hefty medical bills, which safeguards your emergency fund.
2. Prepare for a comfortable retirement
As parents, we look forward to a future where our kids are grown and they have children of their own. Retiring gives us the luxury to slow down and spend more precious family time with our loved ones.
But do you have enough for this desired retirement lifestyle?
With POSB NAV Planner’s Map Your Money, you’re able to project your cashflow for years ahead, taking into account complex CPF rules — a first-of-its-kind collaboration between the CPF Board and a bank. With the added power of SGFinDex, you can also consolidate investments and money from your other bank accounts.
Within POSB NAV Planner, enjoy the flexibility of editing your financial freedom details to get an instantly-updated at-a-glance look at your cashflow projection for your golden years.
Taking all of your assets and spending habits into consideration, the tool is able to peer 10, 20, 30 or even 40 years ahead. By projecting your finances, even if you’re not quite there yet, you still have time to work towards a comfortable retirement by actively making smart changes to your finances (save more, spend less, invest more, get protection).
Remember, it’s never too early to start planning for retirement — the earlier you begin, the more benefits of compound interest (it really adds up to a lot in the long run) you will reap.
3. Spotted gaps while planning for retirement?
POSB NAV Planner lets you view your investments with the bank. And with SGFinDex, that means consolidated Unit Trusts from other financial institutions. With these investments visible in one place, it’s much easier to check on how your money is growing and your combined portfolio.
But aiyah jialat, POSB NAV Planner has alerted you to some gaps in your retirement plan, what kind of band-aid can you use?
Hear, hear: Investments are an option to consider filling those gaps. Grow your money and try out POSB NAV Planner’s investment simulator to make your money work harder for you. Just look for “Make Your Money Work Harder” in NAV Planner – Investments.
Did you know that the “Make Your Money Work Harder” feature indicates how much idle cash you have available for investment? This is automatically calculated by NAV Planner’s algorithm and considers your savings, in excess of what you have already set aside for your recommended emergency fund.
POSB NAV Planner also has a market price feed feature, which allows you to input all your investments into POSB NAV Planner (yes, even those outside POSB and get updated portfolio values! For example, if you bought 100 units of a stock on the SGX, POSB NAV Planner can automatically display its value for you — no more logging in and out of multiple ecosystems just to get a sense of your net worth.
If you’re considering any new investments but haven’t actually bought them yet, you can even manually input them and use the same market price feed feature to monitor their prices (do your due diligence by checking/researching before you buy anything — also a good money principle to pass down to your kids).
Check your insurance coverage
In addition to helping you grow your money, use POSB NAV Planner to do a check on your insurance coverage. While insurance provides protection for unfortunate events such as accidents and illness, adequate cover can really help to offset those big medical bills. Especially for parents of young kids, it would be nightmarish if there’s not enough financial support to take care of their needs — present and future.
Even with a lot of savings in the bank, medical bills and other living costs can really snowball to an unmanageable amount — wiping out an emergency fund in one fell swoop. Hence it’s important to safeguard your money for your family’s future and peace of mind.
Don’t worry if POSB NAV Planner identifies gaps — the smart app offers helpful suggestions too, so you can quickly take action!
This is the first article in New Norm 2021, a series of 6 articles written in collaboration with POSB to help young families make smarter money decisions in this new Ox year.