Starting Work

As you transition from student life into the workforce, most of you will become financially self-reliant for the first time. These are exciting times - who wouldn’t feel a sense of elation when we see our first salary being credited into our bank accounts? But few of us can afford to spend our money without care. Some of us will already have responsibilities - you may already have dependants that will count on you financially, perhaps elderly parents or younger siblings who do not have any income of their own. There will also be student loans to clear off quickly too. Even if you land your dream job, or dream income, you can still land yourself in trouble if you are not sufficiently financially capable. Money management skills are a must have.

Control your spending and credit usage

It is quite natural to want to reward yourself for hard work, but do keep this in perspective. If the latest must-have designer bag or IT gadget takes up a generous chunk of your monthly income, maybe you should rethink the concept of reward, especially since these items are not investments and lose some value almost immediately. Little self-control and a strong urge to splurge, can only spell trouble in the longer run. Read on…..

“… You applied for a credit card. You lunched at posh restaurants and dressed only in the best labels. You bought a new car with a loan. Everything looked rosy, but you were starting to feel the pinch – you couldn’t always pay the credit card bills in full and on time. You started to pay only the minimum sum, the amounts outstanding grew as interest accumulated and overwhelmed you even on payday. You took cash advances and borrowed from your parents, but the amounts kept snowballing. Finally, the car was repossessed and you sought help to restructure your debts to avoid bankruptcy...”

As the old adage goes, always spend within your means (but this doesn’t mean it’s ok to spend everything you earn). Think hard before you borrow. Getting a loan or credit line should only be a last resort because of the costs you will incur and the complications if you cannot keep up with your debt commitments.

Managing your income

Identify your disposable income (i.e. how much of your salary is left after paying taxes and CPF, rent or contribution for your share of household expenses to your parents), and make sure your monthly expenditure does not exceed what is left of your income. Having trouble keeping track of your spending? Read on and fret not. 

Learn to make a budget

A practical way of managing your disposable income and monitoring your expenditure is to draw up a budget. A simple one can be planned in just three steps: 

  1. List all your daily living expenses (transport, meals and rent / contribution to household expenses, etc.)
  2. Decide how much of your salary you intend to spend on each item and stick to it strictly.
  3. Set aside the rest of your pay and save it. Start with realistic amounts first (maybe $200 per month) and aim to work towards at least 10% of your pay. Save more if you can.

Do remember to review your budget every now and then. You may find that your intended expense limits are unrealistic: they may be lower or higher than they really are. If you need assistance, use an online budget calculator.

Adjust the differences accordingly - allocate more money to prioritised items, cut unnecessary costs and make sure you save the remaining amounts. Even if you can’t save much in the beginning, putting aside savings is a good habit to form. Small amounts can build up over time with the help of compounding.

Aim to set aside savings of 3 to 6 months’ salary for unexpected expenditure and rainy days. You never know when you might be out of a job or have to fix a leaking bathroom. Remember also to set aside some money for occasional expenses like getting a birthday present for your Mum or a close friend, for instance.

Don’t be too discouraged if you have not been able to follow your budget closely. Motivate yourself to try harder next month by keeping your financial goals in mind: it’s never too early to save for your retirement, for your parents’ expenses when they retire if they are counting on you; your dream flat or a dream holiday.

Planning ahead

Do make an effort to learn and apply basic money management skills. Develop a financial plan setting out your goals as well as the strategies and action steps to reach them. Learn how disciplined savings and investing can help you reach those goals and be financially prepared with savings and insurance in case of emergencies. We are responsible for our own financial well-being. 

New to paying taxes?

If this is your first job, you might wonder how to file and fulfil your tax obligations. 

Generally, you will receive a notification in the form of a letter or SMS from the Inland Revenue Authority of Singapore (IRAS) informing you if you are required or not required to file an Income Tax Return.

A practical way of managing your individual finances is to understand what is taxable and what is not, and to plan ahead to reduce your tax payable:

  • Generally, all income earned in or derived from Singapore is chargeable to income tax. This includes income you earned from different sources such as your employment, doing freelance work, providing a private tuition service or baby-sitting service, or an online business, etc.
  • With effect from Year of Assessment (YA) 2017, the personal income tax rates start from 0% (for annual chargeable income of up to $20,000) to 22% (for annual chargeable income in excess of $320,000). Singapore’s personal income tax rates are progressive, which means higher income earners pay proportionately higher taxes.
  • There will be a personal income tax rebate of 20% of tax payable to individuals who are tax residents in Singapore for YA2017, capped at $500 per individual. You can further reduce your tax payable by claiming tax deductions such as course fees relief (for any course leading to an academic, professional or vocational qualification, or is relevant to your current employment), parent relief (for supporting your aged parents who do not have an annual income exceeding $4,000), deductions on donations, etc.

More information is available at the IRAS website for new taxpayers entering the workforce.

Staff benefits

Some workplaces entitle you to benefits which allow you to cut down on your expenses. Check with your employer if you enjoy reduced medical and dental fees. You could be covered under group insurance schemes as well. Understand the benefits and limitations of such insurance schemes. They may not be portable if you change employer, so you should consider getting some health insurance (like Medishield or Integrated Shield plans, based on the hospital and ward type you prefer). Also consider getting life insurance (if you require financial protection for your dependants) while you are young.


The above information is prepared in collaboration with the Inland Revenue Authority of Singapore.