Every year, thousands of young Singaporean men enlist and serve two years of National Service (NS).

For some who have been working before enlisting, they would be experiencing a significant pay cut. For others, it would be the first time not receiving an allowance from their parents, and it might be a substantial increase in money, especially when they pass out from command school or their vocational training.

Between the limited allowance and impending tertiary education that will follow, being able to properly manage one's finances when serving as a full-time National Serviceman (NSFs) can be immensely valuable.

Here is a comprehensive guide to help NSFs manage the various aspects of their personal finances.

HOW MUCH DO NSFS GET PAID? 

This is how much NSFs can look forward to receive over the course of their two year service.

In addition to the above allowance, NSFs who serve in combat vocations get an additional $100 in Combat Allowance, while those in more demanding vocations like Armour, Guards, Infantry, Combat Medics, Aircrew and those serving on board ships receive $150 in Combat Allowance.

For the few who serve in "riskier" vocations like Commandos, Naval Divers and Chemical, Biological, Radiological Defence or Explosive Ordinance Disposal (CBRE) receive $300 in Combat Allowance, or "Risk Pay" as those in the service call it.

In all, NSFs will be earning between $13,660 to $27,400 over the two years of their service, depending on vocation and rank. This money is hard-earned and not insignificant, and being able to manage and use it wisely is the best way to do justice to your sacrifices.

The 'good' thing about your NSF allowance is that it is classified as an allowance, so you don't have to take a chunk out of the meagre amount and pay it into your CPF. You also don't pay taxes on it - not that it matters, since you'll barely be clearing the $20,000 in tax-free chargeable income anyway.

SAVING ACCOUNTS FOR NSFS 

Many might argue (and have argued) that the allowance we give our NSFs are too little. More is always welcome. However, because all your other costs are covered by the SAF, including accommodation, daily necessities, and food, you don't really spend much, unless your posting allows you to stay-out.

If you are able to stash away as much of your allowance as you can, you'll be able to accumulate a tidy sum that will place you in good stead for the next chapter of your life - whether that is tertiary studies or starting work.

So, where should NSFs deposit their NS allowance and earn the highest interest?

Due to the low amount and non-salaried nature of NSF allowance, the popular high interest savings accounts in Singapore won't really work for them.

NSFs can look at one of the no-frills savings accounts like the CIMB FastSaver.

Another alternative is the POSB Save As You Earn, which gives you a bonus interest of 2 per cent if you do not prematurely take out your money or stop contributing. For this, you can set decide on an amount you'll be comfortable not touching (unless in emergencies).

INSURANCE FOR NSFS

It is heartbreaking and infuriating to see financial advisers specifically target NSFs as "prospects" and pester them to sign up for an endowment plan or some other product. If you're approached, never agree to sign any thing on the spot, regardless of how attractive the free gifts are.

As a NSF, you're enjoying benefits like medical and dental subsidies as well as complimentary Group Term Life and Group Personal Accident insurance. When visiting a public hospital or polyclinic, your 11B is all you need, and MINDEF/MHA will be footing the bill.

Your family probably aren't depending on your NS allowance, so insuring against financial loss at this stage is probably not a priority at this time.

Signing up for an integrated shield plan might make sense if you're sure you'll want to get treated at a private hospital. If you don't mind C-class wards at public hospitals, your precious allowance can be better spent elsewhere for the time being.

INVESTING AS AN NSF 

As a NSF, time is on your side. You're still young, and that's the best time to start investing and allowing the power of compounding work for you.

Interestingly, if you talk to financial bloggers or investors in Singapore, many of them got started learning and saving up for investing when they were doing their National Service.

However, NSFs also face challenges like having a relatively low amount of start-up capital to invest. Here's where regular shares savings plans come in really handy. They allow NSFs to invest a specified amount of money each month into a wide variety of local and overseas stocks, as well as exchange-traded funds.

SPENDING YOUR DOWN TIME WISELY 

For Singaporean guys doing their national service, this two precious years is an opportunity to build up yourself physically, mentally, and forge networks and friendships with people of all walks of life.

NSFs can take this time to improve their financial literacy and pick up new skills by reading books, learning from online communities, and learning from their fellow NSFs.

This article was first published in Dollars and Sense.