Complete Help guide to Financial Planning National Servicemen (NSFs)
Every year, a large number of young Singaporean men enlist and serve two years of National Service (NS).
For some who've been working before enlisting, they'd be experiencing a substantial pay cut. For other people, it might be the first time not receiving an allowance using their parents, also it might be a substantial rise in money, particularly when they pass out from command school or their vocational training.
Between the limited allowance and impending tertiary education that will follow, having the ability to properly manage one's finances when becoming a full-time National Serviceman (NSFs) could be immensely valuable.
Here is really a comprehensive help guide to help NSFs manage the various aspects of their finances.
How Much Do NSFs Get Paid?
This is how much NSFs can look toward receive during the period of their two year service.
Source: CMPB
In addition to the above allowance, NSFs who serve in combat vocations get an additional $100 in Combat Allowance, while those who work in more demanding vocations like Armour, Guards, Infantry, Combat Medics, Aircrew and people serving aboard ships receive $150 in Combat Allowance.
For the few who serve in “riskier” vocations like Commandos, Naval Divers and Chemical, Biological, Radiological Defence or Explosive Ordinance Disposal (CBRE) receive $300 in Combat Allowance, or “Risk Pay” as those in the service refer to it as.
In all, NSFs is going to be earning between $13,660 to $27,400 within the two years of the service, depending on vocation and rank. This money is hard-earned and not insignificant, and being able to manage and use it wisely is the best way to do justice to your sacrifices.
The 'good' thing about your NSF allowance is it is classed being an allowance, so you do not have to have a chunk out of the meagre amount and pay it into your CPF. You also don't pay taxes on it – not too it matters, since you'll barely be clearing the $20,000 in tax-free chargeable income anyway.
Savings Makes up about NSFs
Many might argue (and have argued) the allowance we give our NSFs are extremely little. More is always welcome. However, because all of your other costs are handled by the SAF, including accommodation, daily necessities, and food, you do not really spend much, unless this post allows you to stay-out.
If you are able to stash away because your allowance as possible, you'll be able to accumulate a tidy sum that will place you in good stead for the next chapter in your life – whether that's tertiary studies or starting work.
So, where should NSFs deposit their NS allowance and earn the highest interest?
Due to the low amount and non-salaried nature of NSF allowance, the most popular high interest savings accounts in Singapore won't actually work on their behalf.
NSFs can look at one of the no-frills savings accounts such as the CIMB FastSaver.
Another alternative is the POSB Save While you Earn, which gives you a bonus interest of 2% if you do not prematurely take out your hard earned money or stop contributing. For this, you can set decide on a sum you'll be comfortable not touching (unless in emergencies).
Insurance For NSFs
It is heartbreaking and infuriating to see financial advisers specifically target NSFs as “prospects” and pester them to subscribe to an endowment plan or some other product. If you’re approached, never agree to sign anything at that moment, it doesn't matter how attractive the disposable gifts are.
As a NSF, you're enjoying benefits like medical and dental subsidies as well as complimentary Group Term Life and Group Personal Accident insurance. When going to a public hospital or polyclinic, your 11B is you'll need, and MINDEF/MHA will be footing the bill.
Your family probably aren't depending on your NS allowance, so insuring against financial loss at this stage is probably not a priority at the moment.
Signing up for an integrated shield plan might make sense if you are sure you will want to get treated at a private hospital. If you don't mind C-class wards at public hospitals, your precious allowance could be better spent elsewhere for the moment.
Investing As An NSF
As a NSF, time is in your corner. You are always young, and that is the optimum time to start investing and allowing the power of compounding meet your needs.
Interestingly, if you speak with financial bloggers or investors in Singapore, many of them started learning and saving up for investing once they used to do their National Service.
However, NSFs also face challenges like having a comparatively low amount of start-up capital to invest. Here’s where regular shares savings plans come in really handy. They allow NSFs to invest a specified amount of money each month into a wide selection of local and overseas stocks, in addition to exchange-traded funds.
Spending Your Down Time Wisely
For Singaporean guys doing their national service, this two precious years is an chance to build up yourself physically, mentally, and forge networks and friendships with individuals of all avenues of life.
NSFs may take this time to enhance their financial literacy and pick up additional skills by reading books, gaining knowledge from social networks, and gaining knowledge from their fellow NSFs.
