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Your First Job

Congratulations on your first job! It is the start of many new things and doing some planning before any spending will go a long way. Read on to find out how to make the most of your early working years.

 

Your 1st Steps

A well-thought-out approach to managing your money can better prepare you to handle different needs and changes in your life. You can begin by identifying your short-term and long-term needs, and how to go about meeting them.

Find out more on financial planning here

 

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Developing a saving habit early allows you to better prepare for your retirement. To see tangible increases in your savings account, set aside 15% - 20% of your salary each month for a start. Draw up a budget and make a plan for your savings and investments to help meet your financial goals.

 

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Your CPF Accounts
The Central Provident Fund (CPF) is a comprehensive social security savings plan, which helps meet youretirement, housing and healthcare needs. Each month, you and your employer contribute to your CPF, which consists of three different accounts: Ordinary Account, Special Account and Medisave Account.

Through schemes such as Workfare and Medisave top-ups for senior citizens, the Government also helps to supplement the CPF savings of lower-wage workers.

A summary of the interest rates and uses for each account is shown below:​

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As a new entrant to the workforce, your contributions to your CPF accounts each month totals 37%, with 20% coming from your salary and 17% coming from your employer*. Do note that if you are a Singapore Permanent Resident, your contributions will start at a lower rate and grow to 37% after two years.

*Based on CPF contribution rate for employees 35 years old and below (for monthly salary $750). CPF contributions are payable for your monthly salary of up to $5,000.

Find out more about CPF contribution and allocation rates.

Use the CPF Contribution Calculator to calculate your monthly CPF contribution.
 
 
Knowing Your Employment Rights
 
If you work in Singapore, you are entitled to employment rights,which include minimum terms and conditions of employmentas well as rights and responsibilities of employees and employers under a contract of service.This extends to mandatory CPF contributions by your employer, as long as you earn more than $50 a month.

Find out more about your employment rights here.

 

Dependants' Protection Scheme

It is always good to be prepared for the unexpected, especially when you have just started working.

If you are at least 21 years old and have made your first CPF contribution, you will automatically be covered under the Dependants' Protection Scheme. The Dependants' Protection Scheme is an affordable term insurance that provides coverage of up to $46,000. The Dependants' Protection Scheme benefit will be paid out to you and/your family members should you become permanently unfit for work or pass away.You can use the monies from your Ordinary Account and/or Special Account or cash to pay for the annual premiums.

 
Education Loan
 
Your education loan is likely to be one of your first financial obligations. Just like any other loan, if you had used CPF savings for your education, you will need to repay this loan (including interest accrued) to the CPF account that you used.
 
Repayment of the education loan begins one year after your graduation or the termination of studies, whichever is earlier. About three months before the start of the repayment, you will receive a package with the loan repayment details. You can begin repaying your loan earlier if you have additional cash in hand.

Find out more about the CPF Education Scheme here.

 

Investments

Having started work recently, you may be keen to make investments and grow your savings as part of your financial planRemember that all investments come with risks, so it is good to be familiar with investment concepts and products before embarking on any investment plans. Learn more about basic investing concepts here before you start investing here.

You may have thought of using your CPF savings for investment purposes. The CPF Investment Scheme allows you to do so through various investment products.

 To make an investment using your CPF savings, you should:

  • Be at least 18 years old;
  • Not be an undischarged bankrupt; and
  • Have more than $20,000 in your Ordinary Account and/or more than $40,000 in your Special Account​

Find out more about CPF and Investing.

 

Growing Your Savings

To help you grow your CPF savings and earn attractive guaranteed interest rates, you can consider making top-ups beyond the mandatory CPF contributions, through a lump sum payment or contributions by GIRO. This can be through the CPF Retirement Sum Topping-Up Scheme, voluntary contributions or by transferring your monies from your Ordinary Account to your Special Account.

The Retirement Sum Topping-Up Scheme allows you to make CPF or cash top-ups to you and/or your loved ones'* Special or Retirement Account.  Topping up to the Enhanced Retirement Sum (available from January 2016), a sum set at three times the Basic Retirement Sum, gives you the opportunity to enjoy a higher monthly payout for life.  You can enjoy tax relief of up to $14,000 per year if you use cash to top up for yourself (up to $7,000) and your loved ones (up to $7,000). 

You can also make voluntary contributions, through a lump sum payment or GIRO, to build up you and/or your loved ones' CPF savings. Voluntary contributions to all your CPF accounts (Ordinary, Special and Medisave Accounts) are subject to the approved limit and do not qualify for tax deduction. However, voluntary contributions to your Medisave Account alone are tax deductible.

For more information on making voluntary contributions, click here.

Alternatively, you can transfer the savings from your Ordinary Account to your Special Account to earn higher interest. However, do note that this transfer is not reversible. You can transfer an amount up to the current Full Retirement Sum in ​your Special Account.  For more info, click here​.

*"Loved ones" include only your parents, parents-in-law, grandparents, grandparents-in-law, spouse and siblings.

 

Supplementary Retirement Scheme

The Supplementary Retirement Scheme is a voluntary scheme that allows you to save for retirement, to supplement your CPF savings. Both you and your employer can participate in this scheme and enjoy tax reliefs.

 
Continuous Training
 
Acquiring new skills and knowledge continuously can help open up new opportunities for you in your career.
The Workforce Development Agency (WDA) provides a one-stop platform with various training and certification courses.

Visit www.wda.g​ov.sg to find out more.​


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​Thinking about and starting to saving early helps you better prepare for different needs that may arise in the future. Your CPF savings will provide you with monthly payouts during retirement, to take care of your basic needs. You can grow your savings early to secure your nest egg by leveraging on the various CPF schemes that are available.
 
 
 

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