Asked on 30 May 2018
I would highy recommend to start tracking your expenses so that you know roughly how much you're spending every month and what are the stuffs that you could cut. I would recommend to download the Seedly app to track (disclaimer - I work at Seedly). If you are spending more than you earn, it's time to relook and see what can be cut off.
After understanding what and how much you're spending, make sure you have two different bank accounts (one for savings, one for spending). Credit your salary to the savings account and transfer the spending amount to your spending account. Only spend from your spending account so that you have better control and most likely not overspend!
Hope that helps!
For purchasing of goods like e.g. Electronic/clothing, I advocate a 3-Day rule. I give myself 3 days to think whether to purchase. Most of the time on the 2nd day I'll forget about purchasing already. Maybe a week later I suddenly thought of it again and give myself the 3-Day Rule. If still there's a want to buy, I'll have no choice to give in. This is to prevent impulse buying. Which sadly it's the reason why most people purchase goods.
You pay urself first usually by
making ur money work harder for u
investment vehicle which pays u to cover ur expenses
SAVE before you spend. A dollar save is A dollar Earned.
You can automate you pay to go to an account which you have a saving purposes.
Bear in mind that every saving should come with purposes and not saving blindly.
Always look out for deals that tt give you discount on ur spending.
Be frugal now so u can take it if you cannot progress.
And if u did progress, u will cherish what you have.
If u live a CRA life now, and is forced to go frugal, u will not see it as a value in life rather a suffering in life.
Hope my reply helps.
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I use Expense Manager to track my daily expenses, and organize my expenses according to categories.
I review my weekly expenses every Sunday at 6pm (it's Sunday 4.40 pm at the time of writing, reviewing soon!).
Knowing where I spent (categories) and how much...I know I have to cut some slack the following week...either, spend more or spend less ;)
And I almost forgot, this is old-fashioned, I practiced that for 3 years before Internet Banking and Smartphones were a thing...
Friday is Pay-Day;
Withdraw money (say $150) from ATM every Friday and that's the amount that I have left to spend until next Pay-Day
I saved 70% of my income like that without being meticulous about spending on x, y, z categories
(Disclaimer: I had way way way lesser expenses back then)
An article that I blindfoldedly wrote a year ago - A couple of reasons to save money - basically, you want to save to have a reasonable degree of freedom in the future...because the future is uncertain...as far as possible, and as reasonably as you can...have a few things in life that you should be able to control...one of them is how much you spend in a given day or week.
Hope it helps
First, you got to know where your expenses are going. If not down to dollars and cents; you should have a rouge gauge as well.
If you are taking grab everyday back and forth to work; take the average and multiply by # of work days etc. You get my drift.
From there, do the same for your food, bills etc. and put it down on paper or excel. You will be able to see the sum layout and determine how much you can save vs how much you want to pay yourself first. I will then choose one category to reduce my spending on (to keep things simple) and identify one thing I can cut back on to cultivate a habit.
Example: Starbucks (used to cost me $8 on average, was on daily consumption :O)... now I've eliminated it and even if I do grab one it's like - once a month? Even with alternatives (bubble tea, kopitiam etc.) I saved myself at least $150 every month!
I would think you need a motivation too.. maybe to be a millionaire/billionaire by xx age? Personal goals plays a huge motivational factor and nope, clothes are hardly appreciating assets and good food does not last forever.. I used to spend alot on good food but now I am more willing to splurge on really good ones vs many medioacre ones and even so; I set myself a budget.
Hope it helps!
This is usually the process I follow:
Determine how much you want to budget for NECESSITIES. Food, utility bills, public transport, baby stuff, telco bills, etc
Once you know this number, it should be a rather stable number month to month, then you will know what is left of your salary.
Decide how much you want to SAVE from your remaining salary.
Set a fixed budget for your WANTS. Stuff like going to expensive restaurants, new shoes, new clothes etc. STICK to this budget, do not be tempted to dip into savings.
Start tracking your expenses. At the end of the month, review it and see how much you can cut. Then allocate your income based on this and aim to send a certain amount each month.
For example, if your take home pay is 2.5k, and your necessary expenses are 1.25k per month. You can aim to save 1.1k each month, leaving $150 (it can be more) as a buffer :)
Hi. I think It's more of priorities issue.
Like what Tee Ming said, use the seedly app to see where you spend your $.
Alternatively, you can do a simple excel sheet Ledger like this :
The current issue:
Notice if we do it the above way, we would be like current situations, all $ goes to pay for expenses and nothing left Because savings is whatever left in the red, in the end like the above example, as we placed it as the lowest priorities.
The way forward:
However, if we keep trying to cut the expenses (purple color item) on the right hand side, as much as possible, I've reduce the cost for you in the example below. If you need futher details, please feel to comments and ask further.
With the above, you can see tha by cutting expenses on all the purple on the right, and take NO GRAB at all but just public transport, we can manage to squeeze out $1057 as savings.
Now instead of putting "Savings" as the last on the left, make savings as an item on the right hand side just below Employee CPF or allowance to parents. this way you can further adjust and play around each item of expense on the right side such that total at the bottom will be almost the same for both Total of B and Total of D. __The key is to make sure you don't spend (Total D) more than you earn (Total B)
** Note that the above exclude insurance, emergency cash savings and also investment. Do get the above done first then add in on the right, insurance. After some time when your income increases, add in investment and try to cut the rest further.
*** Of course there's is so much we can earn only, do ask and read up more at seedly on how to start and do side gig to get a secondary income as a boost and backup for your income security.
That's how i started my budgeting journey! Hope it helps too ! :) Remember to keep to the above budget once you've set it.
Have two seperate accounts transfer your savings to the savings account first
use an expense app to track your spending for two to three months this way you will be able to see which areas need better Managment
Maybe pamper yourself occasionally from time to time (lesser savings). As per what others have shared, do your budgeting and most importantly is to make sure that you set aside some savings every month (can be a small amount) instead of spending it all
Many recommend opening two bank accounts, tracking your expenses etc.
Personally, I just practice a single rule of thumb. Spend money prudently, there are some costs you won’t be able to treat it as expense. For eg, treating your parents, buying fruits for grandparents occasionally.
Its about setting a hard and soft limit to ma allowable spending budget. For eg, from $6 a meal with drinks to cut down to $4 without drinks.
Buying your own groceries to make your own meals and discover alternative ways of living.
Make sure money is not wasted into unnecessary entertainment costs (which I won’t mention) unless you find them necessary (supporting a local movie or production)
The previous answers have already covered most of the main points but just want to add this - paying yourself first (PYF) must happen regardless of percentage or amount. It's setting up the habit that's important at first.
It could be 10% or $100 per month to start with. Get started on it and keep doing it. Go through the budgeting and saving tips from the other answers and challenge yourself to maintain and increase your PYF amount. Ensure you do not touch this at all unless it's an absolute real emergency.
Having a larger income also helps so see if you may have some way to get a secondary income from freelance or side businesses/work. Or upgrade your skills and go for that promotion that pays better.
Review your lifestyle. Ignore how much you save on month 1. Then each month on, track and try to reduce your expenses as a challenge to yourself. Do it until it hurts. That is what you need to live. Then now you can accurately extimate your expenses and savings.
1) Set aside 2 bank account. 1 for savings and investing and the other one is for spending.
2) Set up an automatic giro to the spending account, say $100 a month. This is for your daily expenses including food, transport, parent allowance etc. All your credit cards payment should come from this account.
3) Any big budget expenses like Vacation, getting a new laptop can come from the unspent credits in your spending account. Dip into the saving/investment account only at last resort.
4) Any automatic investment schemes such as insurance and shares,unit trust investments should come from your investment account