Where Do I Store My Emergency Fund?
Emergency fund, aka rainy day fund, aka shit-happens-and-I-need-money-NOW fund. Financial experts will tell you that you'll need 3-6 months of expenses kept somewhere just in case something happens, ala Covid-19. My expenses include food, utilities, my parents' allowance, mobile and internet bills, gym, and some others. All in all, everything come up to $2,200 a month. Which means I'll need to have a minimum of $6,600 set aside for my emergency fund if I want to keep it at 3 months. But since I'm a bit more kiasi (scared to die), so I am saving it to 6 months.
You can store your emergency fund anywhere. It's not an investment. It's a fund that you should be able to tap on immediately when an emergency occurs, thus it's called emergency fund. Duh. Placing it at an account where it takes 3-5 working days to withdraw defeats the purpose. Keeping it in your home drawer would be a safer bet, unless its your house that burns down. Then kwa kwa kwa. Personally, I'm using Singlife to store my emergency funds.
Easy To Setup
I don't enjoy going through the hassle of queueing up at a bank, or meeting some financial planner to go set up an account. Too much time and can be too confusing. Singlife makes setting up an account a total breeze. Simply download the Singlife app, set up an account using your SingPass, transfer a minimum of $500 after your account has been created, and voila! That's it. Took me less than 5 minutes to get everything done.
Easy To Withdraw
With no restrictions or service fees, I can easily log in via the app and use FAST to transfer money out should I need money fast (pun intended). With just a few taps on your mobile phone and money will be available to me to pay for whatever. There's also the use of an optional debit Visa card from Singlife. But the emergency fund is meant for emergencies lah. Not to put aside and use as and when right?
Easy To Manage
Just as it is easy to transfer money out, managing your money is also a breeze. You have a dedicated account number which you can transfer your money to from your bank. I'll do a FAST transfer whenever I get my salary into my Singlife account so as to ensure I don't "accidentally" spend my funds. That's the reason why I don't keep my emergency funds with my savings. Always better to put it in a separate account.
Life Insurance Coverage
Since Singlife is an insurance savings plan, it also covers both terminal illness and death. Should death or terminal illness occur to me before I'm 60 years old, I'll be covered up to 105% of my account value (account value + 5% of account value or $50,000 whichever is lower). Should occur to me from 61 years old, I'll be covered up to 101% of my account value (account value + 1% of account value or $50,000 whichever is lower).
Retrenchment Benefits
Possibly the first time I've seen an insurance savings plan provide retrenchment benefits. If I get retrenched and remain unemployed for at least 4 months, which means I'll start tapping into my emergency fund, Singlife will pay me 3 months worth of the amount I spend per month (which in this case would be estimated at $2,200 per month). The retrenchment benefit is capped at $10,000. Hopefully that never happens. But if there's anything that I've learnt from Covid-19, its that anything is possible.
Term Life Insurance
I didn't have any insurance coverage (besides the one from my company) prior to applying for my term life insurance from Singlife. The Singlife account is an insurance savings plan and it generates a non-guaranteed 2% interest p.a. on the first $10,000 and 1% interest p.a. on the next $90,000. What I have done it simply use the interest generated by the account to pay for the insurance premiums. The interest generated per month covers the premium and then some. This means I don't need to go looking for another policy and then setting aside some budget for it. One less thing to think about.