Manage Your Money Like Singapore

Singapore is not a person, but if it were, it would probably be the sort of person who keeps a very large emergency fund, invests for decades, buys insurance before anything goes wrong, and occasionally forces itself to do things it does not particularly enjoy.

In other words, it’d be a pretty financially prudent person, and what better way can Singaporeans learn about personal finance than from Singapore itself?

Here are four lessons we can learn from Singapore about managing our own money.

1. Build your own reserves

One of Singapore’s greatest financial strengths is its reserves. Rather than spending everything collected during good years, Singapore accumulated reserves over successive generations. These reserves have subsequently acted as a financial buffer when the country encountered major crises.

During COVID-19, for example, Singapore drew on its past reserves to support households, businesses and the economy. The reserves have similarly provided support during previous crises such as the Global Financial Crisis.

The obvious personal-finance equivalent would be your emergency fund.

You may be earning a comfortable salary today, but there is no guarantee that this continues uninterrupted for years. You could lose your job. You could become ill. Your dependents might suddenly need financial support. There are countless ways an otherwise perfectly healthy financial plan can suddenly run into trouble.

A common recommendation is keeping at least three to six months’ worth of expenses as emergency savings. I personally keep in excess of 12 months because I’m quite risk averse, and my expenses are pretty low. Depending on how stable your income is, whether you have dependants and how much insurance you have, you may decide that you need even more.

Make some of your money difficult to spend

There is another aspect of Singapore’s reserves that I particularly like as a personal-finance analogy.

Singapore distinguishes between Current Reserves accumulated during the present Government’s term and Past Reserves accumulated before it. The President has constitutional powers to safeguard the Past Reserves, creating what the Ministry of Finance describes as a “Two-Key” system.

You obviously don’t need a President to approve your next Shopee purchase (then again, maybe you do 🫢). But if you have difficulty saving, creating some barriers between yourself and your emergency savings can be surprisingly useful.

Instead of leaving S$30,000 sitting inside the same account that you use for GrabFood, holidays and credit-card payments, keep your emergency savings separately. You could use an account without a debit card, automate transfers into it every payday and mentally classify the balance as money that does not exist for ordinary spending.

Personally, I put the bulk of my emergency savings into Singapore Savings Bonds (SSB). They are very liquid when the situation calls for it, but the fact that I can only receive the funds at the start of the following month from my withdrawal request means that there is very little chance I’d spend such money on a whim.

2. Invest for the long term

However, Singapore does not accumulate reserves and leave all that money sitting idle in a gigantic savings account. Its reserves are invested, with assets managed by institutions including GIC, MAS and Temasek. Investment returns then contribute significantly towards government spending.

Under the Net Investment Returns Contribution (NIRC) framework, the Government can spend up to 50% of specified long-term expected returns and investment income from the reserves. According to the Ministry of Finance, investment returns on the reserves fund about 20% of annual Government spending.

The remaining value is preserved rather than simply consuming every dollar of investment return today.

Your savings should eventually start working for you

An emergency fund should generally remain safe and liquid because you may need it at short notice.

But once you have sufficient emergency savings and the appropriate basic insurance protection, accumulating more and more cash indefinitely may not be the best strategy for long-term goals.

If you are investing for retirement several decades away, you can consider taking appropriate investment risk and building a diversified portfolio according to your circumstances, goals and risk tolerance. I’ll have more content on this so stay subscribed for updates.

Eventually, one’s portfolio would grow to replace one’s income. This is an important distinction between an individual’s finances and that of a country: a government has an ongoing stream of revenue from taxes and other sources, but an individual’s ability to earn from work is finite.

At some point, whether by choice or necessity, we will stop working. By then, the goal is for the wealth accumulated during our working years to generate enough income and returns to fund our lifestyle.

3. Have an adequate defence

Singapore maintains a significant defence capability despite enjoying decades of peace. This makes sense because defence is something you prepare before a crisis happens. You don’t wait for an invasion before deciding it might be time to train an army.

The personal-finance equivalent is insurance. Insurance can sometimes feel like wasted money because you pay premiums year after year and, if everything goes well, may receive nothing in return. But that’s also the point – you don’t buy insurance because you are hoping to make a profit from becoming critically ill, permanently disabled or dying. You buy it because certain events could cause financial damage so large that you cannot reasonably absorb the loss yourself.

Of course, that doesn’t mean buying every insurance policy an agent puts in front of you, as I have touched on quite a bit before. Singapore’s local “financial advisory” industry is unfortunately dominated by commision-earning agents with a preference for investment-linked policies, so consumers need to be clear what are the policies that can provide them with menaingful coverage, and what are those that disproportionately enrich their agents instead.

Generally, I would go only for pure insurance products that do not embed cash values or other investment elements. This keeps my coverage costs low while providing sufficient protection, and also avoids tangling my insurance with investments.

Insurance is your financial SAF. Hopefully you never need to activate some of its most important capabilities, but you still want them ready when they are needed.

4. Do the boring and unpopular things anyway

Singapore has never built its economic model around giving everyone exactly what they want today. Sometimes policies impose costs or restrictions now because the Government believes there is a longer-term benefit, and CPF is perhaps one of the clearest personal-finance examples.

A portion of employment income is compulsorily saved rather than being available for immediate consumption, with CPF savings supporting major financial needs including retirement, housing and healthcare. People can debate individual CPF policies — and Singaporeans certainly do — but the underlying concept is worth thinking about: sometimes good financial decisions need to be mandated.

Saving money, automatically investing part of every salary and reviewing your insurance are not particularly exciting activities. Increasing your income might involve studying for another qualification, changing jobs or spending your evenings building a side hustle when you would rather be watching Netflix.

None of these offer the instant gratification of online shopping or playing a video game, but good personal finance is mostly about repeatedly doing sensible things that are just plain boring.

Run yourself like a company country

A refrain I’ve heard before is to “run yourself like a company”, but I feel like running oneself like a country is more apt. And what better country to learn from than our very own Singapore?

Happy SG61! 🇸🇬

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Seth Wee was a licensed financial adviser representative from 2009 to 2025, with over 16 years of experience in Singapore’s financial advisory industry.

He started Sethisfy.com in 2019 to share practical insights on credit cards, banking products, and miles strategies, helping readers identify financial products that deliver the best value. Seth has been featured in CNA, Channel 8, Today, and a host of other publications. In 2025, he was also part of a panel at CPF’s Ready For Life festival.

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