![]() It is recommended that you seek financial advice as to the suitability of any investment. This article is for information purposes only and should not be considered as an offer, solicitation or advice for the purchase or sale of any investment products. Read the next article in the curriculum: Emergency fund: Why every Singaporean should have one With these five easy steps in mind, it's time to start budgeting! The money in the savings account should be used to form part of your emergency fund, or for investments. When you receive any income, it's a good habit to immediately transfer money from your expenses account to your savings account so that you are disciplined in saving your money. But this is all a matter of personal circumstances and preferences. With your budget ready, you will know how much you have left to save and possibly invest in the longer term.Ī smarter way to ensure that you actually save this amount is to "pay yourself first" - have two bank accounts: one that receives your salary and can be used for expenses, while the other holds your savings.Īn option is to follow the 50:30:20 guideline, whereby you allocate your income in terms of needs, wants, and savings respectively. ![]() Repeat Steps 4 and 5 if you realise that you are saving too little or too much (a happy problem, it must be said). This will be your "profit" for the month. To calculate the amount you would have saved each month from budgeting, simply subtract the estimated expenses (in Step 4) from your post-CPF income (in Step 1). You can either expense one-off items immediately, or set up a piggy bank - also known as a sinking fund - to apportion a small monthly sum for the large costs. These could be big-ticket expenses such as electronics purchases, overseas vacations, or gifts for loved ones. Now, it's time to factor in any one-off expenses. Step 5: Prepare your personal monthly income statement Or, if you're about to start working at a new location, that can affect your daily commute cost or the average price of lunch.Īlso, it's a good idea to set aside a small sum for other ad-hoc expenses that may occur. Step 4: Adjust personal budget based on preferred lifestyleĬhange is the only constant - the same is to be expected for budgeting as well.Ĭonsider any factors that will change your spending patterns in your monthly budget, so that you do not set yourself up for failure.įor example, you may be expecting a child, which means you will soon need to take into account additional recurring expenses such as milk powder, diapers, and childcare. After all, many millennials have a tendency to overspend and indulge, and you can definitely err on the side of caution when managing your expenses. It's about balancing #adulting and self-care. Always remember that we can be responsible with our finances without being too harsh on ourselves. ![]() ![]() This can be highly subjective - a weekly cup of bubble tea can be a necessity to some but a treat to others. Separate your food and travel expenses further into two groups: "necessities" or "treats". ![]() Try to recall the times when you spent more than you should have on online shopping or bought a round of drinks for your friends. Only three more steps to go! Step 3: Break down budget into 'necessities' and 'treats'Īs you go through your credit card bills and expenditure, you will have a grasp of when you might have been more frivolous or careful with your spending. Remember the 80:20 rule (where 80% of the outcome results from 20% of the input) when you are coming up with this estimate.Īfter going through a few monthly credit card statements, you should be able to have a fairly good estimate of your expenses. ![]()
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