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Humanising Finance
September 2018
Financial Planning for Young Families
     

Financial Planning for Young Families

 
The cost of living in Singapore is often thought to be relatively high compared to many countries. Some may find that it is not easy to start a family in Singapore due to rising prices of daily necessities. However, through proper financial planning, young families will still be able to afford a quality lifestyle. It is vital for young families to draw up a financial plan early, ensure sufficient coverage for medical needs and learn to leverage on financial instruments to build up their retirement nest.
 
1. Keep an Eye on the Cash Flow
To draft a financial plan, a family needs to first know their cash flow. This is calculated by working out the family's monthly income as well as the amount of fixed expenses each month. This determines the sum of savings that the family can set aside for emergency needs. As a rule of thumb, a family should have an emergency sum equivalent to six months' of their total income in their savings account. Discipline is key to ensuring the financial plan is on track. The tip is consistent accumulation. As a family, the needs and wants of the family members should be prioritised and agreed on. In this way, unnecessary expenditure will not derail the overall financial plan.
 
2. Financial Protection
 
Next, a family's savings or net cash flow each month can be poured into structuring a financial plan that caters to their financial protection and future needs. When scenarios such as unexpected deaths, permanent disabilities and critical illnesses strike a family, it is likely to incur hefty expenses that will greatly affect a family's financial wellbeing.

In times of need, financial protection will kick in to provide a safety net. Hence it is important for each family member to have a whole life plan packed with insurance riders. With a whole life plan, they will get a lifetime of protection. Together with riders, replacement income for illnesses and total permanent disabilities will minimise the impact on a family's quality of life.
 
3. Invest Wisely and Retire Smart
 
In addition, a family will also need to think about retirement or savings needs. They can discuss and decide what type of investment vehicles they should look at to grow the family's wealth. This can range from property investments that require a large capital outlay to simple unit trusts investments.

Risk and return are two sides of the same coin and a family must agree on what type of risks they are willing to undertake to grow their family's wealth. Basic instruments like endowment plans allow a family to reach their financial goals through a fixed savings term but the returns are often low. This can be supplemented by unit trusts with higher returns. Unit trusts are riskier investment instruments because they leverage on market opportunities, and thus it requires the investor to understand the market trends and seize the opportunities.

Maybank's Personal Financial Advisors (PFA) at retail branches can help customers to design portfolios aligned with their risk appetite, and update them on the latest market trends so that customers can capitalise on market opportunities. That is why a young family should meet a PFA as early as possible so that the family can start designing a comprehensive financial plan and receive useful advice from the PFA throughout their life stages.
   
 
Maybank Singapore has launched Maybank Privilege to serve clients who hold between S$50,000 and S$300,000 worth of assets with the bank. Maybank Privilege is the start of a client's wealth journey and our team of personal financial advisors are well-equipped to educate clients in a wide range of investment solutions - be it savings, investment or insurance - in order to grow, protect and harness clients' wealth. Discover the perks of being a Maybank Privilege customer today.

Disclaimer: This message is not an advice or recommendation for any financial planning, investment, legal, tax or other purposes and, accordingly, no responsibility or liability is assumed by us or our affiliates, whether directly or indirectly, from any person taking or not taking action.

 
Always wanted to find out more about a finance-related issue? Email us at: corporateaffairs@maybank.com.sg
 
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