Hit your target net worth early : Page 3 of 4

Hit your target net worth early

"We can save a lot of our income, but without insurance, we can spend all of that very quickly with just one illness," says Ms Kanasan.

"It's even worse if we have to stop working and stay at home [after the illness]."

Having taken money from their parents for over two decades, most young graduates would want to be financially independent.

"You won't ever want to turn back to them and say 'sorry mum, I'm sick now, can you pay my bills'," says Ms Kanasan.

Mr Tan adds that medical insurance is "all [the cover] you need" if you have no dependents.

"If you are going to pass on, nobody is going to miss you financially. You need to at least make sure that you can be responsible for your medical expenses if you are unwell."

Watch your debt

Debt and sky-high interest repayments can wreck your financial plans so you should always keep an eye on it. You also need to make a distinction between good debt - like business or study loans that can reap investment returns in future - and bad debt like a new TV that does not.

While paying off a debt is a priority so as to reduce fees or interest, you should still save some money during the repayment period.

"For instance, if one has 20 per cent left (of income) after deducting monthly expenses, 15 per cent can go towards the repayment of the debt" with the other 5 per cent being saved, says Ms Tok from DBS.

The savings will come in handy on a rainy day. To prevent the debt from getting worse, debit cards can help maintain financial discipline, adds Ms Tok. Unlike credit cards, debit cards prevent you from spending more than what you have.

Purchase this article for republication.



Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.