Let’s face it, two years of National Service is a long time. While it might sound like a waste of time for many, it is also the perfect time to start saving for your future! I too was a chao recruit once with zero financial literacy but by following this simple savings guide, I was able to grow my NS allowance to afford my own house and wedding at 27.
Introducing the Colonel Method to grow your money during NS
Many will recognise the Colonel Rank from its iconic three insignias or crabs as we say in NS. It is the highest rank attainable in the army (excluding the ranks for generals) with a monthly salary of around S$15,0001 according to job portal Indeed.
With that in mind, I resolved to save at least that much by the end of my two years of NS. I did my research and came up with a three-step (crab) guide to optimise my allowance. Bear in mind that I did not want to chiong in NS, so this guide is based on non-specialist and non-officer allowance, but the general savings principles remain the same. You can view the current rank allowance for all vocations at the CMPB website here2.
Without further ado, here's how you can go from recruit to “COL”:
- Calculate and budget your expenses
- Optimise your savings
- Leverage on NS perks
Calculate your expenses
The very first thing you need to do is take stock of all the things you spend money on. This includes everything from your phone bills to your Mr Coconut fix. List them all out and sort them into categories like food, transport, entertainment, etc.
Your time in NS is going to help you cut down a bunch of those things since you’ll be in camp most of the time. Go ahead and amend the list, accordingly, cutting out non-essentials like buying video games, ordering in Grab Food to camp and the like.
If you’re a die-hard penny pincher like me, you can further cut back on your expenses by omitting most luxuries. Here are some tried-and-tested personal examples:
- Only take public transport. I shared a Grab ride back with my bunk mates on days when I was super tired.
- Eat meals only in camp or at home. I went to the camp canteen maybe once a week and really missed my mum’s home-cooked food.
- Downgrade and cancel unused subscription plans. I cancelled the the Canva Pro account I got for school to a basic account and downgraded my 4K Netflix plan.
Now that we have a budget that is as trim and fit as your body during BMT, let’s move on to attaining 🦀crab 2.
Optimise your savings
Now with your expenses sorted out, it is time to split that allowance. After deducting your monthly expenditure, apply the 3:2 rule to your remaining allowance. The 3:2 rule basically divides your savings cash pool into two buckets: 3 parts to investments and 2 parts to an emergency fund.
If you suck at math like me, here’s an example to illustrate:
Say you want to save S$300 (half of your BMT recruit pay).
S$300/5 = S$60
Investments: 3 x $60 = $180
Emergency Fund: 2 x $60 = $120
The money in your investments will help you progress towards your long-term goals (more than 3-5 years away) like buying a house. Your emergency fund complements that, acting as your safety net in case you run into medical or financial emergencies.
Here are my recommendations for each:
Investment
Consider parking your money in an investment vehicle like Singlife Sure Invest. I won’t go into the nitty-gritty details of what Investment Linked Plans (ILPs) are but there’s a useful article that explains and debunks common myths about ILPs here.
At a glance, the benefits are:
- Start investing with as little as S$1,000
- Choose from 3 portfolios, in accordance to your risk appetite
- No lock-in period, make withdrawals at any time without penalties.
The interface is also really user-friendly, and you can sign up for it right now by downloading the Singlife App here.
Do note that investments entail some level of risk, and you can opt to put the funds allocated in this segment into your emergency funds instead.
Emergency Fund
Life doesn’t always go your way and you’ll need a stash of money you can rely on for a rainy day. This is where an emergency fund comes in to play, giving you a 3-to-6-month buffer of your usual monthly expenses while you get back on your feet.
You’ll want a high-yield savings account with high liquidity so you can make withdrawals anytime to use as your emergency fund.
You can continue to use the 3:2 rule beyond NS and maintain both accounts to maximise on your potential returns.
Learn to use your NS benefits
Aside from the monetary benefits like the recent NS50 credits or cash incentives based on your IPPT score, there are in fact many NS exclusive offers that slip under the radar.
Take the MINDEF & MHA Group Insurance Voluntary Scheme for example. The Core Scheme provides up to S$300,000 life and personal injury coverage to all active servicemen (including while you’re on reservice) but ends after your ORD. But what if I told you, you could extend that coverage and increase it up to S$1 million from as little as S$0.17* per day! The Voluntary Scheme just does that and is a great way to protect the nest egg you built up in the previous step. This will also give you a nice head start over your peers who might go on to pay more expensive premiums for insurance plans in the future. Oh, and if you’re planning to wife your girl up someday, you can get her and your kids that same million-dollar coverage for the same low price.
If you want the full rundown of what other perks you might be missing out on, be sure to read this article so, you don’t unknowingly throw them away.
NS is not a waste of time
There you have it. Follow this guide like I did, and you’ll be well on your way to kickstarting your finances during what some might describe a waste of time. I hope that chasing these three crabs will lead you to the level of financial health where you can afford to treat yourself and your loved ones to an actual chilli crab dinner when you ORD.
Of course, don’t forget to live a little and splurge on that Grab Food into camp now and again with your buddies. NS is only two years long but the money you save and the friendships you make during that time might last your lifetime.
Notes:
1. Source: Indeed, Singapore, “What Is the Army Sign-On Bonus? (With FAQs)”, accessed on 28 March 2023.
2. Source: CMPB, Singapore, “Monthly Allowance, accessed on 28 March 2023.
Important Notes:
* Premium shown is for Group Personal Injury and is based on a monthly rate (rounding off to the nearest cent) for an Insured Person, aged 70 and below at the next birthday.
Disclaimer:
This policy is underwritten by Singapore Life Ltd.
This is published for general information only and does not have regard to the specific investment objectives, financial situation and particular needs of any specific person. A copy of the Product Summary may be obtained from Singapore Life Ltd. and the participating distributors’ offices. You should read the Product Summary before deciding whether to purchase the product. You may wish to seek advice from a financial adviser representative before making a commitment to purchase the product. In the event that you choose not to seek advice from a financial adviser representative, you should consider whether the product in question is suitable for you.
Singlife Sure Invest
As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premium paid. Investments in this plan are subject to investment risks including the possible loss of the principal amount invested. The value of the units, and the income accruing to the units, may rise or fall. Past performance of the ILP sub-fund(s) is not necessarily indicative of future performance.
Group Term Life
This policy has no savings or investment feature, there is no cash value if the policy ends or if the policy is terminated prematurely. This is not a contract of insurance. Full details of the standard terms and conditions of this policy can be found in the relevant certificate of insurance.
Group Personal Injury
This product has no savings or investment feature, there is no cash value if the policy ends or if the policy is terminated prematurely.
The benefits of a personal accident policy will only be payable upon an accident occurring. Before replacing an existing personal accident policy with a new one, you should consider whether the switch is detrimental as there may be potential disadvantages with switching. A penalty may be imposed for early termination and the new policy may cost more or have fewer benefits at the same costs.
