I have read and came across many articles and books on how to budget effectively like envelope technique and there are apps like Mint and YNAB ( you need a budget ) and locally OCBC also offers a budgeting tool which is great comparing yourself to others in the same category.
If you have a smart phone, there also various mobile apps available like Spendee, Monny, Toshi Finance to help you keep track of expenses. However, i found it hard to stick with it and keep up the discipline to key in every transaction after a while. Yes I am lazy which is why I found this method of keeping the budget fairly useful.
This budgeting style was actually shared with me during a course which I attended. It had nothing to do with the course itself but the trainer found it useful to share with us and I was glad he did because i find it quite flexible and easy to remember and apply.
I call this the 1. 3. 3. 3 budgeting for your salary. You can apply this method no matter how much you are earning or take home every month.
10 % – Giving
30% – Spending
30% – Saving
30% – Parents
Basically the idea is to spend 30% of your income, giving 10% to charity or church, saving 30% and giving the rest to parents or mom in particular, because usually moms will save the money for you so effectively you will be saving 60% and you can always fall back to your parents for help in times of need.
The 10% giving is actually a practice of tithing or giving back to God or society of what you have as a form of appreciation because we all where we are with of help from people around us like parents, friends and teachers and mentors so it can be thought of as a form of goodwill to others who may not be as fortunate.
Why this form of budgeting is good
it is a top down approach so I actually pay myself first by allocating the money accordingly. I highly recommend opening another account for savings which is separate from your spending so there will not be a tendency to overspend. Every month I just do a interbank transfer 30% to my savings account where it will be used for future expenses or investment.
Before I started using the budget I have to manually track how much I am currently spending and whether my expenses can fit into this 30%. If not, i will either have to allocate a higher % to spending and lesser in other areas or to reduce my spending to fit 30%. Also try not to compromise on the savings portion if your expenses are above 30% because this is what will help you to become financially free.
If your salary is deposited into your bank account tracking what goes in and out is fairly easy, by looking at the bank statement or through Internet banking.
How about my spouse
If you happen to be married and have a working spouse, save all the salary of one spouse ( the wife ) and spend only 1 salary. Some adjustments may have to be made to the amount compared to a single person but overall savings will increase and your future self will thank you for it.