Self Employed Tutor: How I Manage My Finances

When you are working for no one but yourself, it can be a rather "frightening and hairy" affair to contemplate and plan for the future, money-wise that is. A tutor who goes by the online moniker rejoin offers his take on this subject matter:

"The following post express my views (and my views only). It's not meant to advise or counsel people.

I'm a self-employed tutor in my early 30s. I have to be extra careful with my finances since I do not get employer contribution to my CPF, or the benefits of a secured job (i.e. like school teachers or some permanent employee).

The following is how I handle my finances, in decreasing order of priority.

1. Health insurance/Hospitalization plans.

- I look through all the 5 major insurance companies and buy a private medical insurance (plan A). All plan A schemes are comparable to one another. I chose Great Eastern Life. I also purchased a full-rider.

2. Life insurance.

- This is for the benefit of my loved ones, should I pass away (young). When I'm old, this is for the benefit of my family and children. My total coverage is more than 300k (which is not a lot by today's standards).

3. Critical illness/Term insurance.

- I bought a CI plan, for some medium term coverage. /font>

4. Contribution to CPF

- I contribute to my OA, SA and Medisave account on a monthly basis.

5. Retirement planning.

- I have plans with various insurance companies for retirement plans.

6. Stock investing/Fixed deposits/Liquid Cash.

- I invest some of my liquid cash into short-term fixed deposits, or stocks. For high liquidity, I recommend OCBC360, as well as the current various promotions offered by UOB, POSB (up to 1.5% interest p.a.).

As for how much I spend on them.

1. About 800/year.

2. Approximately 10% of my yearly income.

3. Approximately 5% of my yearly income.

4. Approximately 10% of my yearly income.

5. Approximately 10% of my yearly income.

6. The rest of my liquid cash, and available resources after expenditure.

My belief in a financial planning is that you need a pyramid-like structure. The base of the pyramid has to contain the safest products (i.e. savings plans, retirement plans). The top of the pyramid will include slightly-risky products together with your liquid cash. These are the funds you can afford to lose."


The Czar (Site Founder)

Dated 22 December 2014


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