While the 6-month emergency fund approach is a general rule of thumb, we all have different needs and lifestyles. Consider the following before squirreling away money for your emergency fund - so you'll always have the funds you need 💰🐿️
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If you’re the only one bringing home the bacon, consider the following:
How many dependents do I have? What stage of life are they in? What expenses can I adjust downwards to preserve my savings?
In addition to household expenses like utilities, groceries, your parents and/or children’s allowance, you should also note down how much you need to save for insurance premiums, investment commitments, taxes, and home mortgage repayments.
By fully understanding your needs, you’ll have a better idea of the amount of money you’ll need for a rainy day. ☔️
Thinking of switching professions? Dreaming about throwing in your letter with panache?
If you’re adamant about quitting, ensure you are financially ready for the lifestyle you will have between jobs. And be prepared—finding the right job match may take longer than expected! Market uncertainties, recession, or securing the right job fit may be considerations for delays.
You enjoy the perks of managing your own time, but may face difficulty building a substantial savings pool. Ask yourself whether you’re paid regularly, and be extra diligent in saving more when your cheque rolls in to make up for potential late payments and “slower” months. Remember, your cash top ups to CPF too, and that all self-employed persons need to contribute mandatory Mediasave if they earn an annual Net Trade Income of more than S$6,000.
Sabbaticals tends to be planned, so it’s important to calculate how much you need prior and start building your savings. Some questions to ask yourself: will your whole sabbatical be unpaid leave, or is a portion paid? What activities do you plan to complete during this period?
If you’re not returning to a guaranteed job after your sabbatical, you should also set aside enough to cover both your sabbatical, and the job search duration after.