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The 5-Step Salary Budgeting Guide for 1st Jobbers

As you grow older and financial responsibilities start to increase, you’ll start to realise there’s a lot more to save up for than you imagined previously. Your wedding, emergency fund, home purchase, renovations, the occasional holiday, are all things that are going to compound the stress you have if you don’t plan properly.

There’s so much to save up for, but yet it always seems like there’s too little time to do it. Sometimes you wonder if you can ever reach that ideal stage of financial security, given your daily expenses to account for and a gazillion other things you want to use your money for.

Fret not though, the key is actually in taking little baby steps – small, actionable tasks you can take towards your saving goals! Here’s how to get your finances down pat.

setting investment goals


“I’ve only just found myself a job. I’m barely able to save every month, what goals do you want me to have when I haven’t even stabilized my career?”

[Read also: I just got my first job. How much of my salary should I be saving?]

If you’ve just started work, it might be a bit hard to determine what your financial goals should be. But even having a ballpark figure like “I want to save $5,000 in 2 years”, can make a huge difference to how you save and spend your money. So give yourself a quantifiable objective to achieve and a reasonable timeline to do so.

setting up bank account singapore


Most people have separate bank accounts for different purposes e.g. daily expenses and saving money. You’d want to transfer your savings to a dedicated account immediately whenever you receive your pay. So even if you overspend and end up having to eat bread by the time the month is drawing to an end, you’ve already set some money aside.

If you’re too much of a busybee or just plain lazy, you can apply online for a standing order/instruction that automatically transfers the amount you want to save into your dedicated savings bank account every month.

But how much should you save?

how to determine how much to spend


Whenever you get your pay check, it’s easy to go haywire on your spending. One night out for drinks, $100 gone. Go out for a fancy dinner date or birthday party, another $100 gone. Buy that new iPhone, $1,000 gone.

This is why it’s important to actually allot a fixed budget for the things you spend on and stick to it. A good gauge would usually be 50% for necessary expenses or “Needs” and 20% for everything else or “Wants”. That’s a total of 70% of your income you’re spending.

Let’s assume you earn $3,000 a month.


salary budgeting

Below is a sample breakdown of expenses you may have:

household expenses breakdown




70% of your monthly salary is $2,100. But if you were to continue spending as above, you’ll be spending $2,650 every month! And this is not even including annual holidays and taxes!

In this case, your expenses are too high because your Wants exceed the 20% of your income, or $600. You’ll have to cut down your spending by $550. As with all things, the idea is to reduce your spending with as little compromise as possible to your quality of life. One way is by hunting for cheaper alternatives.

For example, you don’t have to consume so much alcohol after work. Instead of allotting $400, why not cut it down to $100? You can either drink less, or substitute beers for wines and hard liquors. In the same way, consider cutting down on dining out from $300 to $150 a month, and spending $200, not $300, on new clothes.

Your new expenditure breakdown will look something like this:

needs and wants



When it comes to savings and investments, it’s always best to start young. But if you’re at an earlier stage of your career and drawing a lower salary, you can actually allot a smaller portion of 30% of your salary to these. I liken this to training for a marathon – better to contribute in smaller amounts in a longer term than to contribute all at once later.

Out of that 30%:


10% goes to saving for your Emergency Fund

You don’t want to be in a sticky situation financially if you lose your job. So it’s best to set aside an estimated 3 to 6 months’ worth of your pay in case you get retrenched or fired. So at least if anything happens, you have some buffer money to tide you through times of unemployment. It might seem a little depressing to plan for these kinds of things but hey, you never know what might happen.

After you’ve saved enough, you’ll want to redeploy the 10% here for other investment and savings purposes. Liquid cash, while good in that you can utilise it at any time, can’t grow much if its stuck in a savings account with meagre interest rates.


10% to Protection building

Sounds fancy but really, it’s just planning for a worst-case scenario. You know, by buying some insurance? There are 6 types of situations you should get insurance for:

  • Death
  • Total Permanent Disability
  • Critical Illness
  • Disability Income
  • Hospitalisation
  • Personal Accident

Again, in an ideal world, you’d want to get covered in these 6 areas as soon as you can while you are still in the pink of health and eligible for as much coverage possible. Many insurance plans do not cover pre-existing conditions. You wouldn’t want to have to shell out money you’ve painstakingly saved in your emergency fund if you got into an accident, fell sick, or got hospitalised.

However, if you don’t have the financial appetite or funds for it, you can just start from a lower coverage amount and work your way up.

For example, while you’re still young and single, you probably don’t need to insure yourself for millions of dollars. The cost of that level of coverage is going to be too expensive for you. However, when you’re married with kids, it’s important that your coverage is enough to keep them going should something bad happen to you.


10% to saving and investing for whatever plans you have

Growing your financial assets is very important since the value of money actually decreases over time, thanks to inflation. That’s why ice kacang during your mother’s time cost way less. Plan your investments to help you with the long-term goals you want to achieve. Such aspirations include:

  • Getting married
  • Buying a house
  • Renovating the house
  • Buying a car
  • Raising a family
  • Retiring comfortably

Achieving these goals can be done via investment products such as REITS, stocks, unit trusts, etc. Which one you choose will depend on your appetite for risk, but most importantly, your chosen method needs to beat inflation. And just in case it needs to be said, leaving your money to rot in bank accounts will NOT help you beat inflation.

[Read also: How Much Do I Need To Save Before I Can Start Investing?]

tracking expenditure


Discipline in tracking your daily spending will help to keep you on the right path towards your saving goals since you are able to tell when you’ve overspend. You’ll want to monitor your spending habits and reallocate your budgets whenever necessary so you do not exceed what is allotted every month and affect your saving plans. Check out our article on useful apps you can use on your smartphone that will help with tracking your expenditure.

But okay, to be honest it’s much easier said than done. To be able to successfully do this, you’ll need to consciously key in your expenditure each time you make a purchase instead of just throwing those random receipts into the nearest trashcan.

But don’t worry, check out our article about mobile apps that can help you track your spending with less fuss. They’ll make managing your finances much easier.

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