How to Manage Your Money


Setting up a budget takes effort, and if you do it right, the benefits outweigh the time invested. A good budget doesn’t just help you save money, it also helps you stay on track in reaching your savings goals. Angeline Tan, a Certified Financial Planner with Great Eastern Life sees many people who say they want to save money.

The successful ones, she says, are those who plan and have budgets. “It’s the science of self-monitoring – if something is being monitored then you are more likely to achieve that goal,” says Tan.


First, determine your monthly income. This includes your salary, rental income from property you own and anything that comes in on a monthly basis. Next, figure out how much you spend. Keep all bills and receipts you’ve collected and write down everything you’ve paid for in a month, whether it’s by cash or credit card. Be honest and track every single expenditure. Implementing a good budget only works if what you’ve set up is completely accurate.

List all your spending under these three categories: fixed expenses, committed expenses and discretionary expenses.

Fixed expenses include housing, insurance, taxes and car payments, things that don’t change from month to month. Divide the sum by 12 to get the monthly cost. Under committed expenses, list utilities, mobile phone charges, food, transportation, credit card payments, children’s school fees, and allowances for parents – these are things you’re committed to.

Everything else falls under discretionary expenses: spending on clothing, entertainment, school books, children’s extra-curricular activities, medical bills, etc.

As for vacations and gifts for special occasions, add up how much you spend in a year, divide by 12 and you’ll have an idea of how much it costs per month. Once you’ve written everything down, you’ll have an honest picture of where your money goes.


There’s no secret to figuring out how to save money. “If you’re just starting out, recognise the very basic principle of financial discipline – spend less than you earn,” says Gabriel Yap, Reader’s Digest Asia’s Money $avvy columnist.

Take a good hard look at your expenses. If there’s more money going out than coming in, it’s time to reduce your spending. Start with discretionary expenses. That’s usually the easiest to cut back. Perhaps you can eat out once instead of twice a week.

Next, look at your committed expenses. Can you take the bus or train instead of a taxi? Can you downgrade your mobile phone plan? Be more energy and water efficient at home – that can help lower your utility bills.

If your fixed expenses are more than your monthly income, you may have to think about making some big lifestyle changes or else you won’t be able to save any money. Perhaps you can get rid of the car, or move into a smaller apartment. Remember, the goal of a budget is to help you build up your savings.

50-30-20 PLAN

How much should you be spending, and conversely, saving? It depends on whether you’re single or married, have children, live with your parents or support them, and how old you are. A general rule of thumb is you should be saving at least 10 to 15 percent of your income after tax. Obviously, the more the better, but this is the minimum you should be saving. As for expenses, housing is typically your biggest cost and here you should only spend one-third of your take home pay.

If you’re just starting out in making a budget, you could try the 50-30-20 plan suggested by Harvard professor Elizabeth Warren. Your fixed and committed expenses should make up half of your after-tax income; 30 percent is discretionary spending and the final 20 percent goes to savings.

It may seem daunting and a bit overwhelming to go from barely making ends meet to saving a chunk of your income, but having a plan in place is the first step.