22 Dec 2023

SOURCE: CPF Board

The New Year is more than just a time for a fresh start and exciting resolutions. As you take the time to jot down your goals and aspirations, try sparing a moment to review your finances for the year ahead.

From maximising income tax relief to reviewing your insurance coverage, here are six things to do at the start of the year that can give you peace of mind for your finances!

1. Check your CPF account for added interest

Your CPF interest is calculated monthly and credited on 1 January annually. A great way to begin the year is to review your CPF account and see how much additional interest you have earned!

An important thing to note is how your CPF interest can increase steadily thanks to the power of compound interest. This means you can earn interest on your interest, boosting your CPF savings even more. Don't miss out on watching your CPF savings grow every year!

2. Plan and maximise your income tax relief for the year ahead

Reviewing your income tax relief eligibility is a good financial practice that can effectively reduce the overall tax you have to pay.

Take some time to look through the types of tax relief and rebates available — you can also claim tax relief for your CPF contributions!

Additionally, tax relief of up to $8,000 per calendar year can be claimed for cash top-ups made to your Special or Retirement Account. An additional $8,000 in tax relief per calendar year can also be claimed for cash top-ups made to the CPF accounts of your spouse, parents, parents-in-law, grandparents, grandparents-in-law, and siblings. The tax relief benefit is capped at the FRS level, terms and conditions apply.

3. Review your housing mortgage

Taking the time to review your housing mortgage at the beginning of the year can be a smart financial move that leads to savings in interest payments.

Before you do so, take a step back to evaluate your financial situation for the upcoming year ahead. If you have plans to spend on big-ticket items such as a housing renovation, you may have to be more conservative in repaying your housing mortgage.

Using a bank loan to pay for your housing mortgage? It’s a good idea to periodically review the different housing loan packages offered by the banks. Since interest rates can fluctuate, look out for loan options that reduce your interest amount and thereby your monthly housing mortgage repayments .

If you took up a HDB loan, consider making a partial capital repayment of your outstanding HDB loan to either shorten the repayment period or lower your monthly instalment amount. 

4. Update your CPF nomination

Making a CPF nomination allows you to determine the persons who get your CPF savings after your passing. Without a CPF nomination, the Public Trustee Office will distribute your CPF savings in cash according to Singapore’s intestacy laws or an inheritance certificate for Muslims.

Your family will have to apply to the Public Trustee’s Office in order to receive your CPF savings. This process can take up to six months and includes an administrative fee.

As your relationships and life circumstances can change over time, it is a good idea to review your CPF nomination annually to ensure that it reflects your current wishes.

Take note that upon marriage, any CPF nomination you had made will be automatically revoked. However, a divorce does not revoke a CPF nomination. This is similar to a will, which is not revoked upon divorce. 

5. Assess your emergency fund

An emergency fund serves as a financial safety net, providing you with a readily accessible source of funds during unexpected emergencies.  

Similar to a CPF nomination, your emergency fund needs a reassessment as your financial situation may change over time. Take the start of the year to review your emergency fund requirements and adjust accordingly.

This simple practice takes only a few minutes but can go far in providing you with additional peace of mind for the year ahead.

6. Review your insurance coverage

Health insurance can shield you from hefty hospital bills, but it is also equally important to select plans with premiums that are affordable and sustainable for you.

Make it a practice to annually review your insurance coverage and consider your health and personal circumstances. For example, have you had additional dependents such as a newborn over the last year? If so, it might be worthwhile to increase your life insurance coverage.

Check out our guide on health insurance to learn more about the different types of health insurance!

Financial planning as part of your annual New Year's resolution

As you outline your personal goals and set your New Year’s Resolution, don’t forget to review your finances at the same time. Dedicating time to evaluate your financial status not only prepares you for the upcoming year, but also helps motivate your efforts, especially if you set clear and achievable targets.

Here’s wishing you and your loved ones a joyful and prosperous new year!

The information provided in this article is accurate as of the date of publication.