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17 Jun 2020


The Woke Salaryman on topping up CPF for retirement

If you think that financial planning is too tedious and can be put off to a later date, you’re not alone. Many young adults are too caught up with their present financial situation and day-to-day life to think about their long-term finances. Plus, there’s always the misconception that you can only start growing your wealth after you earned your first pot of gold. 

However, contrary to what you might think, the best time to start planning for your financial goals is while you’re still young and have plenty of time to grow your savings. 

To help kickstart your financial planning journey, here are eight easy-to-pick-up budgeting tips that you can easily adopt.

1. Set goals early 

Setting your financial goals is the first critical step. Putting down your goals in writing will help you establish a finish line to aim for and determine what you need to do to get there.

The Woke Salaryman on topping up CPF for retirement

To help you stick to your goals, you might want to pin them to a notice board, save them on your phone, or even post it on social media. For example, Facebook and Instagram share what you published on these platforms a year ago, so these “memories” posts can be a good reminder. Alternatively, set it as an alert on your calendar so that you can review your plans. 


2. Start saving as soon as possible 

Starting to save at an early age gives you a longer runway to reach your financial goals and gives you more time to benefit from the power of compound interest.

You can use a formula known as the “Power of 72” (72 / interest rate = years to double) to determine how many years it takes for your savings to double at a certain rate of interest. 

The Woke Salaryman on topping up CPF for retirement

3. Use the 50/30/20 rule when budgeting 

We all know that we need to budget our finances wisely, but many Singaporeans may not know where to start. One simple rule of thumb is to split your income into three broad buckets to meet your expenses and savings needs. Here’s how your three buckets can be organised:

The Woke Salaryman on topping up CPF for retirement

To make budgeting easier, take advantage of the many finance apps available that can accurately and conveniently track where your money is going every month.

4. Set up a dedicated bank account for your savings

To ensure that you don’t spend money meant for your long-term savings, it’s a good idea to open separate accounts; one for your regular expenses and another just for savings. 

Arrange for the funds meant for your savings to be automatically transferred to the dedicated account the day you receive your salary. You can do this by applying for a standing instruction with your bank, saving you the trouble of having to make the transfer yourself each month. 

You can also set up a GIRO arrangement for regular top-ups to your CPF Special Account (SA) to build your retirement fund. Did you know that for just $100 a month in your SA, you can grow your retirement nest egg by more than $24,000 in 15 years*!

* Computed using base interest rate of 4% p.a. on the Special Account (SA). Other terms and conditions apply.

5. Maximise returns on ​your CPF savings

To grow your CPF savings for retirement, you can leverage attractive interest of up to 5% per annum* by topping up your Special Account (SA)^ with cash. By doing so, you’ll also get to enjoy tax relief of up to $8,000# per calendar year (only for cash top-ups up to the prevailing FRS).  

You can also transfer funds from your Ordinary Account (OA), which earns a base interest rate of 2.5% per annum, to your SA to earn the higher interest rate of up to 5%* per annum^. 

* Including an extra 1% interest paid on the first $60,000 of your combined CPF balances, with up to $20,000 from your Ordinary Account (OA).

^ For members below age 55 only, and up to the current Full Retirement Sum. If you are aged 55 and above, you can top up your Retirement Account (RA) with cash, or transfer your SA and OA saving to your RA, up to the current Enhanced Retirement Sum.


#Tax relief cap applies for top-ups to RA and SA, and MediSave Account.

6. Look for ways to cut costs 

To help lower your expenses, always be on the lookout for ways to save money; whether it’s finding the cheapest place to buy groceries or taking advantage of dining deals on your credit card.

The kind people at the Consumers Association of Singapore (CASE) have made it easier for you to find bargains with its Price Kaki mobile app. This app helps to keeps you updated on promotions of common household items, groceries, and hawker food.

7. Focus on income, not savings

While keeping a lid on expenses is important to budgeting, some experts recommend that you should focus more on income. After all, there’s only so much of your costs that you can save on, but your income has a far higher potential to grow in the long run.

The Woke Salaryman on topping up CPF for retirement

To help grow their income, more younger Singaporeans are supplementing the income from their day jobs with side hustles and gigs. If you have some skillsets in areas such as photography, graphic design, digital marketing, tutoring or even online sales, now is the time to use them and monetise them in the most time efficient way possible. 

8. Keep your debt in check 

Having too much debt is a big obstacle to building your savings. For a start, you should ensure that you make at least the minimum payment on all your outstanding debts every month to avoid late fees and extra interest charges. 

You should also list your debts from the highest to the lowest interest rate and repay as much as you can on the debt that incur the highest interest. Keep doing this till you are debt free!

For younger Singaporeans, spending time to draw up a budget and plan for their long-term finances can be quite daunting. But if you make the effort to do this now, you will find that your financial journey will become a lot smoother down the road.  

Information in this article is accurate as at the date of publication.