4 Things You Should Do Today To Secure Your Family's Financial Future

For most adults in Singapore, work is a necessary responsibility that we have to undertake.

Whether you are working for a multinational, a startup or running your own business, many of us are working for an important reason – to provide for our family.

As we strive to give our best, moving up the corporate ladder to give our family a more comfortable life, there are other things we need to do to secure our family’s financial future beyond a monthly paycheck.

Here are four things that you should do today to secure your family’s future.

While growing up, we were repeatedly reminded of the importance of saving for a rainy day. The idea is to have sufficient savings we can rely on when an urgent need arises, without having to borrow from someone or take a bank loan.

One of the first things you need to do is accumulate at least six months of your family’s average monthly expenses. If your family spends about $3,000 every month, then you should have at least $18,000 of savings.

If you are worried that six months of expenses is insufficient, consider increasing this to nine months’ or even a year’s worth of savings. This will allow you to fall back on a large enough reserve in the unfortunate event that you find yourself out of work for a period of time or having to pay for an unexpected bill.

Healthcare expenses can be costly in Singapore, and a sudden illness may be all it takes for your savings to be quickly depleted. To cater for unexpected health expenses, ensure that you and your family members are protected with sufficient health insurance coverage.

Firstly, you should consider getting a private Integrated Shield Plan such as AIA Healthshield Gold Max. This covers the cost of hospitalisation and treatments, giving you and your loved ones peace of mind that your family will not be saddled with a hefty hospitalisation bill.

Aside from your hospitalisation bill, you may also incur additional expenses due to health conditions. This may include other treatments outside the hospital, or having to leave your job for a temporary period to recuperate. In such circumstances, having a critical illness protection plan will be important as it gives you the financial means to do so.

AIA offers a range of critical illness plans providing customised level of coverage.

While health insurance can cover your medical related expenses, you should also consider ensuring that your family’s long-term needs are provided for in the event that you are no longer around.

This is where life insurance plays an important role.  

You need to calculate the amount that your family will need in the absence of your financial support. Some things you need to consider include how much loans you currently have, the number of children you have, whether or not your spouse is working and your current monthly living expenses.

What many people don’t consider as well is the additional cost that a surviving spouse may incur to care for the family. For example, a domestic helper may be required to help out with household matters, or that the surviving spouse may need to take a sabbatical from work. These cost additional money and needs careful consideration beforehand. 

Last but not least, you need to ensure that assets you leave behind or insurance policies that you buy are given to the right beneficiaries.

This can sometimes be more complicated than what we expect, particularly if you are providing for both your children and parents. For example, in the absence of a will, all your assets will automatically be distributed in accordance to Singapore’s Intestate Succession Act. This means that your surviving spouse and children will inherit all the assets, while your parents will be left with nothing, even if you were intending to leave them a portion of your assets to care for them in their old age.

It’s important for you to understand how your assets will be distributed in your absence, and to ensure you have a valid will if you are not keen on the default manner in which the Intestate Succession Act will follow.