You will be able to explain why funding all your goals at once usually fails, and what to protect first.
When your goals need more each month than your budget can save, something has to give. The natural first instinct is to cut every goal by the same proportion so that none of them is left out. This feels fair because it avoids making a choice. For goals with a date attached, it usually fails, and the failure shows up when you can least deal with it.
Mei and Daniel have a goals sheet that lists every goal from this course. Their wedding needs S$850 a month (all figures for Mei and Daniel are invented examples), the number they worked out in lesson 3.4, "Build your wedding budget and savings plan". The cash part of their home needs S$500 a month, from lesson 4.4. The car needs about S$333.33 a month and Daniel's diploma needs S$250 a month, both from lesson 1.4. Together that comes to about S$1,933.33 a month, and their budget can save S$1,500 a month.
Their first instinct is to give every goal proportionally less. Daniel builds a formula that gives each goal the same share of what it needs, about 78%. This is even splitting: when total needs are more than you can save, every goal gets the same proportion of its monthly amount.
Under the formula, the wedding gets about S$659.48 a month instead of S$850. By month 30, the wedding fund would hold about S$25,784, against S$31,200 that must be paid before the day. That leaves them about S$5,416 short in the month of the wedding. The home, the diploma and the car fall short by similar proportions, so every goal reaches its date with about three-quarters of what it needs. Once they see what the formula does to the wedding, they delete it.
Even splitting leaves every goal a little underfunded, and the gap appears on the goal's date, when the payment can't wait: the hotel, the HDB payment, the course fee. The usual fix at that point is borrowing, which is the outcome lesson 1.1, "A goal needs three numbers before you can plan it", warned about. A dated goal that has 78% of its money on its date has not been 78% achieved. For most dated goals, it is a goal you can't pay for.
Two things need to be in place before any big goal gets money, because they protect all the other goals: an emergency fund and basic insurance cover.
Without an emergency fund, a job loss or a hospital bill gets paid by raiding a goal. It is usually the goal with the most money in it, and often just before its date. The Singapore personal finance system, lesson 3.1, "How big your emergency fund should be", shows you how to size one.
Basic insurance should cover the risks that would wreck the plan: hospitalisation, serious illness, and the death or disability of someone whose income the plan depends on. A couple saving for a flat on two incomes, as Mei and Daniel are, has a plan that only works if both incomes continue. Insurance keeps the plan working if one of those incomes stops. Module 4 of The Singapore personal finance system covers insurance for hospitalisation, serious illness, death and disability.
If you don't yet have an emergency fund and basic insurance, building them is the first call on your saving, even though your big goals then start later. Mei and Daniel already have both, so their S$1,500 a month is free to go to goals.
Among the big goals, fund first the ones with a fixed date and a high cost if you miss it. These get funded in full. Mei and Daniel have two of them. Their wedding has a booked venue, so the date is fixed, and missing a payment can mean losing deposits. Their HDB flat is the other one: HDB requires the balance purchase price to be paid in full before key collection, so that date is fixed too. HDB's key collection page sets out how the balance can be paid, so check it there for the current rules.
Goals whose date can move without much harm come after the fixed ones. These are the goals that bend to make the plan fit. Daniel's diploma runs several intakes a year, so starting a few months later costs little. The car is optional, so delaying it costs almost nothing in money and only some convenience. Lesson 8.2, "A ranking method for competing goals", turns this fixed-versus-flexible ordering into a scoring method you can apply to any list.
Retirement can feel like the least urgent goal because it is the furthest away. For most employees in Singapore, CPF contributions continue whatever you choose, so your retirement saving doesn't stop. It can still be thinned out without anyone noticing, mainly by using a lot of CPF for housing. Lesson 4.3, "The trade-off of using CPF for your home", showed how this happens.
Retirement isn't on the goals sheet as a monthly figure, so keep an eye on it while you rank the other goals. Note how much CPF your housing plan uses. Note also whether any voluntary retirement saving is being dropped to fund nearer goals. If it is, write it down on the sheet as a trade-off, so the reduction is recorded as a decision you made with the numbers in front of you.
Before you fund anything, confirm your emergency fund and basic insurance are in place. Then sort your goals into those with a fixed date and a high cost of missing it, which get funded in full, and those that can move, which take what is left and wait if they need to.
Open your goals sheet for the activity. Go through each goal and think through what would happen if it arrived late.
In your sheet, mark each goal as fixed, flexible or optional. Next to each one, write what happens if it is late.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).