The Working Adult Starter Pack: Savings and Emergency Funds

Welcome to the first of a multi-part series where we discuss financially prudent ways to be a tireless cog in the economy working adult. The series will touch on how to start with personal finance matters from insurance to investments, and from credit cards to property. First, we kickstart the series on how much to set aside for a rainy day, and where we can place such funds.

While this series is skewed more towards relatively younger people who have just joined the workforce, it can also apply to those who just haven’t paid much attention to their personal finances until now. Subscribe to my Telegram to get updates on future parts of this series.

Your salary

Nothing gets you in the mood to spend quite like a regular paycheque every month, especially when you have just started working. But saving is also a habit that needs time and practice to be built. Reprogramme yourself for saving and start to find joy in setting aside money rather than splurging.

Challenge yourself to save at least 50% of your take-home salary, and tune it up to 70% if you can. This highly depends on your salary amount and obligations, of course, but while your salary may be fixed (or perhaps not?), you might realise that some of your expenditure are not that non-negotiable.


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Your liquid savings

You need a bank account to hold some money for expenses and bills as well as to credit your salary. With bank accounts offering pretty bad interest rates now, you should minimise the amount here. I would recommend enrolling with POSB Cashback Bonus. If you already have an existing DBS or POSB account (except for DBS Multiplier, which will be converted into a multi-currency account once you enrol with POSB Cashback Bonus), you can use it for this programme.

Essentially, you get cashback for crediting your salary, spending with your card (more on this in a future post), and investing regularly (also another upcoming part of this series). This means you can get pretty decent returns without even maintaining a balance in your bank account. This frees up money to be placed into other higher yield instruments.

Aside from some money to meet with your immediate spending needs, you should channel funds to something like Singlife Account or Gigantiq, which offers you a decent rate on the first $10,000 placed inside. This is much higher than bank interest these days, and still allows you to withdraw as and when you like, all without the hassle of multiple conditions to fulfil.

Your reserves

If you have not, you should also start building your emergency savings in case of a rainy day. I like calling it “the reserves”, and just like Singapore’s, it should be flush with cash, locked away until it’s needed, and no one else but you need to know how much is in it.

On a more serious note, the amount of emergency funds recommended is usually 6 months of expenses, and some even say income. Others find it alright to have very low amounts since they’d rather invest any spare cash they have. How much to set aside for contingencies depends very much on your personal risk appetite. I would personally err on the side of caution on this and put more into my personal reserves. It gives me a greater peace of mind, and also allows me to seize investment opportunities when they arise.


Savings and emergency funds are the foundation of one’s finances. Make sure you’re saving, have a sizeable amount of emergency funds, and put them into higher yield accounts instead of banks.

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See you in the next post of the series, and join the chat in Telegram!

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