Wednesday, December 16, 2015

GMGH's Young Working Adult Financial Starter Kit

I have juniors and friends who are just starting to join the working world and I realized that many of them have absolutely no clue when it finally comes to taking over their own personal financial matters from "mummy and daddy".

I'd just like to share my personal opinion of what I would consider a pretty decent beginner's "Starter Kit" for people joining the workforce. Sure, it's definitely basic, but that's because it is meant to be. Are there better alternatives? Yes, but of course those advanced players should feel free to go straight for an "Expansion Pack" if this is too basic.

GMGH's Financial Starter Kit
POSB eSavings
CIMB FastSaver
POSB GO! Debit Card

Optional Extras
Income over $18,000 - 1a: BOC F1RST Visa
Income over $30,000 - 1b: CIMB Visa Signature Card

Okay explanation time, so why do I suggest these?

POSB eSavings (link)

For those that really really bochap, DBS owns POSB, which combined together has the densest (in my totally unresearched opinion) ATM and branch network across Singapore. DBS/POSB is also one of the 3 local big boys, which means that they are able to help you with a wide range of uniquely Singaporean financial quirks, such as, but not limited to:
  • opening an SRS account
  • opening and linking a CDP account (to buy stocks and bonds)
  • applying for IPOs
  • purchase of SSB and SGS (government issued bonds)
  • opening of CPF-IS accounts

This is not to say that other banks cannot or will not provide such services in the future, but it's nice knowing that your bank is quite deeply connected and rooted to Singapore, so in a sense, you are already "future-proofed".

However, I have only so far been talking about what POSB can offer as a bank, but why the eSavings account specifically? 

It has a low minimum of $500 balance before a fall-below fee is charged, which is a pretty darn good way to force you to have at the very least, $500 of emergency cash that you can access. Other than this, the account is essentially free and comes with easy access to all the services that the bank can provide, of course, only if you are eligible for those services.

CIMB FastSaver (link)

It is ALWAYS a good idea to separate work and play. Although your POSB account has the word "Savings" in it, in reality you ought to be using it more as a current account with a quick and easy $500 buffer that you can dip into (and immediately top up if you do so). All other money should be transferred to this little bad boy.

Once this CIMB account has $1000, it will be generating a very generous 1% interest rate with no special monthly conditions to meet and hoops to jump through. That's right, 1% on cash that you can withdraw anytime you like. This is NOT a shitty fixed deposit. It's a high yielding cash savings account.

CIMB is part of the local FAST network which means transferring money between CIMB and POSB is very fast and very easy. CIMB is also a good stepping stone to other basic+ products and they are known for having rather attractive fixed deposit promotions, while DBS is notorious for not giving a flying fish about deposits.

Having a dual-bank set-up like this helps to control spending and saving by making them more distinctly separate. It also allows you to access a wider ranger of products and you can even pit both banks against each other for other things, like loan comparisons and such. Another perk in my opinion is that each account is covered by the SDIC, which means your deposits at each bank are covered for up to $50,000. That is pretty reassuring, isn't it?

POSB GO! Debit Card (link)

No, you do not get to immediately dip your hands into a credit card - yet.

Having a debit card is a fantastic stepping stone to introduce the technologically backward students to the adult world of non-cash payments. A debit card in a sense can be better than a credit card because it restricts you to only spend money that you have. Essentially in the future when one upgrades to a credit card, they should use it exactly as if it was a debit card - spending only what they can immediately pay off, and then pay it off immediately in full when the amount is due.

This POSB GO! debit card is pretty nice because it gives a flat 0.3% rebate on all spending. Yes, that is absolutely right. Instead of constantly going to the ATM to withdraw money, carry around wads of cash, deal with change and - omg - small coins, you can just pay by card. Not only is the transaction smoother in most cases (unless they are having a machine or network problem), but your statement will also help you keep an electronic account of your expenditure as well.

Oh, did I mention that the GO! card is also your ATM card? And it has a NETS FlashPay wallet too, so it can replace your EZ-Link and be your transportation card too!

So with the POSB GO! debit card, you can make retail payments by NETS or MasterCard payment (0.3% rebate for using MasterCard). If the machine doesn't work, you can drop by any DBS/POSB ATM and withdraw cash using the same card. If you are doing online shopping, you can pay by eNETS (sometimes it can be cheaper) or by MasterCard. With the NETS FlashPay wallet, you basically get an upgraded EZ-Link card which can be used for transportation, as well as making miscellaneous payments for a lot of small stuff. I make almost all my payments at McDonalds or 7-11 with my FlashPay card.

Plus, it's free. Throw away that useless basic bank ATM card and use this instead.

Basically, this is a pretty darn useful card which introduces you to the world of cashless payments. The only thing it is lacking are the credit card "promotions" and even bigger rebates offered by other cards. Again, this is just a basic suggestion. Credit cards are even easier to open and close compared to bank accounts, so bouncing around and finding the best card to suit your lifestyle and spending is always open in the future.

[Optional Extra] BOC F1RST Visa Credit Card (link)

If you are drawing a salary of more than $18,000, I would bring forward the BOC F1RST Visa Credit Card as THE beginner's credit card to get. Why?

Well, firstly it has one of the lowest minimum income hurdles to pass to be eligible for a credit card. Most credit cards require a minimum $30,000 annual income and not everybody makes that amount.

The card comes with a standard 2-year annual fee waiver, so you don't need to worry about paying for a credit card. NEVER pay for a credit card. Set a reminder to go off in 23 months, then haggle with the bank for waivers or just cancel your card. In 2 year's time, who knows what other cards are being offered and what else you might be eligible to have and would upgrade to instead?

The credit card has a double-edged credit limit of $500. This means that your credit card spending is always capped to prevent you from going on a crazy shopping spree, but it does limit how big of a purchase you can stick on your card and your overall monthly spending. Personally, I think it is a good thing, especially since this is your first credit card. Beginners should not drink from the Forbidden Well of Endless Credit unless they know what they are doing. If you play with fire as an idiot, you'll get burnt. Like an idiot.

The card gives a flat 0.5% rebate on all purchases, which is marginally better than 0.3%, but hey, it's free and it's better than nothing, so why not?

I had to admit that their bank tie-ups and promotions for the card aren't that great at all, but hey, who cares? The key to using a credit card smartly is not to buy cheap things on discounts and promotions that you DON'T need. They key is to use your credit card and shift your purchases from cash to card and enjoy a cash rebate on it, as well as some convenience to boot.

Finally, I won't lie to you about it, but not all machines will take debit cards. This is especially true if you are travelling overseas. Having your POSB GO! MasterCard debit card and this BOC F1RST Visa credit card should allow you to be able to handle 95% of merchants, both local and overseas!

[Optional Extra] CIMB Visa Signature Card (link)

For people with spiffy $30,000 jobs, congratulations and welcome to the credit card club where you can prostitute yourself to banks and cards that offer you the best promotions. Don't be shy, just use whichever card benefits you the most. Just remember that you should use it like a debit card, not a credit card. However, this is the card that I would throw at most people if I was the supreme financial dictator.

First off, this card is... FREE FOR LIFE. Yes, that's absolutely correct. If you get this card, you never need to worry about ridiculous credit card annual fees and making that awkward "waive or cancel my card" empty threat to the poor bank employee on the other end.

The card also have a flat 0.5% rebate on all purchases, which is just great. Why can't other cards be this simple and straightforward too?

The upside lies in the possible 3.8% rebate that you can get in certain spending categories if you hit $500 spending a month over at least 3 transactions. Book a flight and hotel online and pay for the taxi ride to the airport with Visa PayWave. Boom, immediately 3 transactions on the card which would probably be over $500 and you just got a 3.8% discount on your holiday. If you plan your purchases well, you should be able to group up your spending into certain months so you can hit the $500 minimum spend a get the 3.8% rebate. If you normally make over the counter retail purchases, consider either paying with PayWave or moving some of those "commodities" over to the online shopping realm and claim the 3.8% rebate on them.

The final tip is to always volunteer to pay the bill first when dining out with friends. Most people are just lazy to pick up the tab first and then chase down people for their share, but my experience so far has been very positive. With just a few meals, if the group is large enough, you can hit your $500 minimum spend easily! People that prefer to pay in cash usually OVER pay you and don't want any "small change" back, while people that ibank transfer the money usually round up the amount so they don't feel so cheapskate by transferring exactly to the cent. And then you also get a 3.8% rebate on THEIR spending. Fantastic.

This CIMB Visa Signature card is really a great stepping stone to how other credit cards work and the hoops that they make you jump through to qualify for extra goodies. If you can't manage to "up your game" using this rather simple and straightforward card, don't even try and think of getting something like the UOB ONE account + credit card combo, it would just be too confusing.

Similar to the BOC F1RST card that I suggested as an alternative, this card is a Visa, which means coupled with your MasterCard, you can pretty much take on the world at this point of time, considering that you don't have a fixed, low credit limit to hold you back.


Like I started out saying, this is just the tip of the iceberg when it comes to picking out the right financial products for your life.

Having 2 bank accounts and a MasterCard and Visa is the minimum that I would advise, because it almost completely opens up the range of services that one can access and enjoy.

A lot of people only look at numbers, like account interest rates and the credit card rebate %, but they either miss out or have trouble analyzing the qualitative factors of the different financial products.

On top of looking for the best "numbers" out there, a huge consideration that I would say is often overlooked is the overall convenience and ease of use of the financial products and how they come into play to make your life easier.

For example, travelling knowing that you have cards that can be used overseas, give you a slight rebate and also allows you to draw money directly out of international ATMs give you a piece of mind that is hard to put a price on. For a traveller like me, I treasure this piece of mind a lot. 

This post is made in December 2015. I'm sure in the future, financial products will change, come and go. The overarching point of this post is not that specific financial products are awesome, but it is that financial products need to be compared relative to each other, and also in an absolute sense to what they can directly offer to benefit you. In a few years from now, these products might not exist, but hopefully my logic walking you through will help you ascertain what are some of the factors to considering when looking at bank accounts and credit cards of the future.

Now go forth and conquer the world!


  1. Hey, damn good kit! I endorse :) Thanks for taking the time to guide those newbies who just started out to work haha

    1. Hi LP,

      Thanks for the endorsement :) I know some people that still only have their legacy POSB account from when they were kids and are afraid to use any kind of cards! Hopefully this reaches them, haha

  2. Wouldnt OCBC 360 still be the no brainer choice?

    1. Hi Wei Xiong,

      No doubt OCBC360 is a fantastic account, but would it be useful as a base scenario for everyone starting out?

      I know some people that don't take home $2000 a month, or their company pays their salary very old school and the transaction doesn't qualify for the "Salary Bonus".

      The "Credit Card Bonus" and "Invest or Insure Bonus" are quite dangerous to those who are not familiar with finance. Instead of using the credit card bonus as a way to reduce their credit card expenditure, it instead becomes a mandatory minimum monthly spending, which is a very bad personal finance habit to pick up. I don't even hit the credit card bonus every month myself.

      The "Invest or Insure Bonus" is a sneaky way to rebate you for getting suckered into their financial products. Rather than go down the wrong and expensive route for investing and insuring, I would prefer this carrot not be dangled and lead people down the wrong path.

      I do think that the "Giro Bonus" of 0.5% is very do-able. Handphone bill, credit bill and insurance premiums. However, if that's the only bonus that one can get, they might as well put their money with CIMB and get 1% while not having to jump through any special hoops.

      OCBC 360 also has a high $3000 monthly minimum balance.

      For people drawing higher salaries, such as graduates or employees that have worked a few years, the OCBC 360 is a great upgrade especially if you can grab the "Salary Bonus" of 1.2%. However for people just starting out, it might not be suitable for everyone.

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