National Service (NS) is one of the best times to start your personal finance journey.
You may be searching for the best savings account to park your money in.
However, each account has its pros and cons.
Instead, why not use a few accounts together to maximise your benefits?
Here’s a 4 account strategy which NSFs can take advantage of.
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The 4 Best Accounts for NSFs
If you’re a NSF and are at least 18 years old, here are 4 accounts that you are able to open:
#1 DBS Multiplier Account
The DBS Multiplier Account is a popular high-yield savings account.
Usually, you will get the most benefit if you credit your salary to the account.
However, DBS has expanded the income category to include your NS allowance as well!
As a NSF, you are eligible for 2 categories in the Multiplier Account:
- PayLah! Retail Spend
- Income (when you credit your NS monthly allowance)
You will need to have a combined total of ≥ $500 to enjoy a 0.5% p.a. on your first $10k in the Multiplier Account.
The basic monthly allowance for a recruit is $580. As such, all you need to do is to spend at least $1 using PayLah to enjoy the 0.5% interest!
To enjoy the 0.5% interest rate, you will need to credit your NS allowance to the Multiplier Account. This can be done by updating your bank account number in the NS Portal.
It would be good to double check that your allowance is being credited with the reference code ‘SAL’ or ‘PAY’.
PayLah! may be found in stores where you can’t use Visa or Mastercard
Some shops do not allow you to use Visa or Mastercard to make payments. Instead, they only accept cashless transactions from mobile wallets like PayLah!
Some examples of these shops are hawker stalls or neighbourhood shops.
You can find out the differences between Visa PayWave and NETS to see why shops may prefer to use NETS instead.
By just making one transaction with PayLah! each month, you get to enjoy a 0.5% interest rate.
However, this 0.5% that you earn is much lower compared to the other 3 accounts.
No minimum balance in the Multiplier Account up to 29 years old
If you’re below 29 years old, your Multiplier Account does not have a minimum balance requirement.
What’s more, if the Multiplier Account is your first account with DBS, you do not need to maintain a minimum monthly balance even after you’re 29 years old!
As such, you are able to leave as little as you want inside the Multiplier Account.
How to maximise your Multiplier Account
I would recommend leaving slightly above the amount you expect to spend with PayLah! inside the Multiplier Account.
This ensures that your money is better utilised to earn a higher interest rate in the other accounts.
If you are having trouble with tracking your expenses, here are 8 tips to help you manage them better.
The DBS Multiplier is an extremely flexible account. With the NS allowance being included in the Income category, you can earn a decent interest rate too!
Standard Chartered JumpStart Account
The Standard Chartered JumpStart Account is one of the best savings accounts for students and NSFs.
So long as you’re between 18-26 years old, you can open the JumpStart account with no deposit required!
Here are some of the benefits:
- No minimum balance and no fall below fees
- 0.4% for your first $20k in the account
- Debit card with 1% cashback for all eligible Mastercard transactions
The main selling point of the JumpStart account for NSFs is the JumpStart debit card.
So long as you make any Mastercard transactions with your debit card, you will receive a 1% cashback!
- Any retail spend
- Any online transactions
The cashback reward will be credited to your JumpStart Account at the end of each month.
You do not need to have a minimum spend to earn the cashback. This makes the JumpStart debit card a great option for students and NSFs!
I would recommend you to use the JumpStart Account as your main spending account. This allows you to take advantage of this 1% cashback.
This is kind of cheating, as the SingLife Account is actually an insurance savings plan. However, it does have many characteristics that are similar to a savings account.
The SingLife Account offers an extremely attractive return rate of 1.5% for your first $10k.
What’s more, there are very little requirements for this account as well. Here are some of them:
- Minimum account balance of $100 to enjoy the return rate
- Unlimited withdrawals and deposits which will not affect the return rate earned
- No fixed monthly contribution required
The SingLife Account has a debit card as well. However, the only benefits that it provides are:
- No FX fees when making an online purchase
- Retrenchment benefits
I feel that JumpStart debit card provides a better benefit due to the cashback!
There are some drawbacks to the SingLife Account as well, such as:
- Unable to make ATM withdrawals from the account
- Withdrawals from the account may take up to 3 hours to reach your account
- App is rather buggy and you may have problems when trying to make a withdrawal
The 1.5% return rate that the SingLife Account is offering trumps every other account available to an NSF. I would recommend to build up your $10k in here to maximise the return rate.
You can also view my comparison between the SingLife Account and the DBS Multiplier Account to see which is better for you.
POSB SAYS Programme
The POSB Save As You Serve (SAYS) Programme is a special savings programme for NSFs.
This programme is under the POSB Save As You Earn (SAYE) Account. Usually, it requires you to credit your salary to receive the bonus interest.
However, under the SAYS Programme, your NS allowance lets you earn the bonus interest too!
The SAYE Account provides an attractive interest rate of between 2.05% to 2.25%.
Earning the interest rate
To earn this interest rate, you will have to do the following:
- Set up a POSB/DBS Account where your NS allowance will be credited to
- Set up a POSB SAYE Account and link to your existing POSB/DBS Account
- Set a monthly savings contribution
- Set a date for the amount to be deducted from your POSB/DBS Account
You can use the DBS Multiplier Account as your debiting account. This allows you to enjoy benefits from both the Multiplier Account and the SAYS Programme!
This is because both DBS and POSB are actually the same bank.
How much interest can you earn?
The interest rate is split into 2 components:
- A base interest rate between 0.05% to 0.25% (depending on your monthly savings contribution)
- A bonus interest rate of 2% if you don’t make any withdrawals
If you make a monthly savings contribution of $300 each month, you will be able to earn a 2.2% return.
However, if you make a withdrawal, all the bonus interest for that year will be forfeited. As such, you should decide on an amount that you’re comfortable with saving first!
You can check out my review on the POSB SAYS Programme to find out more.
The strategy to maximise your savings
I would suggest to split your monthly allowance into 2 main categories:
You’ll have to decide an allocation into each category. I would recommend a 60-40 split.
Since you’ll be spending most of your time in camp, you would not need to spend that much money.
If you’re very disciplined, I believe that you can increase your savings even more!
After creating all 4 accounts, here are my suggestions to maximise them:
|DBS Multiplier Account||Spending using PayLah!|
|Standard Chartered JumpStart Account||Spending using JumpStart Debit Card|
|SingLife Account||Emergency Funds|
|SAYE Account||Savings for Short-Term Goals|
The amount that you’ve allocated for your spending category can be split into 2 accounts:
- JumpStart Account
- DBS Multiplier Account
You can use the JumpStart debit card for Mastercard transactions. This will help you to earn the 1% cashback.
For places that don’t accept Mastercard, you can use PayLah! instead.
By just making one PayLah! transaction each month, you will receive a 0.5% interest rate on the funds in your Multiplier Account.
Singapore is aiming to become a cashless society. As such, you may start to use cash less and less.
Having a combination of the JumpStart debit card and PayLah! should be sufficient to cover all of your spending needs.
You can also consider using other mobile wallets such as Google Pay that allows you to earn some rewards while you spend.
Both accounts do not have a minimum balance
Moreover, both accounts do not have a minimum account balance. As such, you can allocate only what you need for your PayLah! and Mastercard spending.
This is great as it helps you to limit your spending to the budget you’ve set.
What’s more, your remaining money can earn a higher interest in the other 2 accounts!
Emergency funds are an important part of every financial plan. If you can start building it up during your NS, this will give you a great headstart!
The amount of emergency funds that you need as an NSF may vary from person to person. Most of the time, you do not need as much as when you’re working.
You may still have working parents that can provide for you if an emergency happens. As such, you may only need 3 months of expenses in your emergency fund.
Even though you may need a small amount for your emergency fund, it’ll still be good to start building it up during NS!
I would recommend to park these savings into the SingLife Account. This maximises the returns you can earn, especially for your first $10k.
All you need is a minimum of $100 in the account to receive the 1.5% return rate!
The only problem with the SingLife Account is that the withdrawals may take up to 3 hours. If you require the money immediately for an emergency, you may not be able to get it in time.
Besides that, the SingLife Account is a great place to store your emergency funds.
Saving for short term goals (e.g. tuition fees)
Depending on your financial situation, an emergency fund may not be your priority now. As such, you may have other financial goals like saving for a short term goal.
Tuition fees for your higher education may be such a goal.
The POSB SAYS Programme allows you to set a monthly contribution into your SAYE Account.
As such, a portion of your NS allowance can be placed here to save for your short term goals.
You can change the monthly contribution amount at any time. As your NS allowance increases, you may want to increase your contributions too. This will help you to grow your money even more!
The 2.2% (minimum $300 per month) interest rate is slightly higher than the SingLife Account.
However, you will forfeit your bonus interest if you make any withdrawals from the SAYE Account. This is a great deterrence that prevents you from touching the money in the account!
As such, the SAYS Programme allows you to use the SAYE Account like a short-term endowment plan. This will help you to be more disciplined when saving for your short term goal.
To summarise, here’s a diagram of the 4-account strategy:
How much should I be placing into each account?
Here are some possible scenarios that you may have:
You have more than $10k of savings
Congratulations, you are in the best position to take advantage of all 4 accounts!
Here’s what I would suggest for you:
- Place $10k into the SingLife Account
- Place the remaining of your funds in the JumpStart Account
- Transfer only what is needed for PayLah! spending to your Multiplier Account
- Contribute at least $300 with the POSB SAYS Programme
This strategy helps you to maximise the interest rate on your savings.
You may also want to place your funds from the JumpStart Account to the SAYS Programme instead. You can do so by increasing your monthly contribution at the start.
After that, you can lower it to a rate that you’re comfortable with.
You may also realise that you have a substantial amount of emergency funds. You may think that having a large safety net is good, as you’ll be covered for any emergency.
However, you’re missing out on potentially higher returns. If you had invested some of that money, you may have greater returns in the long run!
Since you already have a safety net, you can consider learning how to invest.
To find out more about investing, you can read my Investing Starter Guide.
You have less than $10k of savings
If you have less than $10k, there is no fixed strategy for you. However, this doesn’t mean that you’re at a disadvantage!
You should still try to put as much of your savings into the SingLife Account. This ensures that it will be able to earn the highest return rate at 1.5%.
I would suggest to build up the $10k in the SingLife Account first before considering the POSB SAYS Programme.
However, you may still choose to use POSB SAYS, especially if you wish to develop a savings habit!
By combining the 4 accounts above, you are able to maximise the benefits when you both save and spend.
I strongly encourage you to come up with a plan suited for you needs, based on these 4 accounts.
By taking action today, you will be better prepared for the future!