Month end is probably my happiest day in the month as its payday!! While first day of each month is probably my saddest day when all the money are transferred out of my salary crediting account to the respective accounts I’ve preset to pay off my debts i incurred over the past month or to my savings account.
Over the years I’ve worked, I’ve overspend and splurge enough to know that I need to have a proper system setup for my salary, otherwise, i’ll probably be penniless once i hit retirement age (sans CPF). Coupled with the new apartment I signed my bank account over a couple years ago, money planning have never been more important.
Below is how I allocate my salary, after CPF deduction.
As a Chinese, it is ingrained in me that I need to give my parents an allowance the moment I start working. While there is a growing trend for parents to reject this allowance or ask for only a small token, as they are otherwise working, or wanted the youngsters to save up more in this dog-eat-dog world, my parents wasn’t under this category. I was happy to give this allowance due to filial piety and wanting to speed up my parents retirement.
Allocation = 20% of salary
With an apartment, everything needs money. From the water to electricity to internet bills, everything costs money. Budgeting for bills is easy as over the months, you will realise that the monthly bills are pretty consistent. All you need to do is take the average of the past few months and just add on some buffer for it in case you exceed for some reason.
I split the bills with my partner where we will transfer a fixed amount into a bills debiting account.
Allocation = 10% of salary
I maintain separate finances in terms of daily spendings or entertainment from my partner. Mainly due to the fact that both of us are working and we do not see the need to support each other financially. I have a rather tight spending budget on myself largely because I enjoy travelling and would prefer to save up my monies for long-haul trips.
I am a simple person, and my usual choice of lunch locations with my colleagues during work days are coffee shops and hawker centres, with the occasional restaurants when we couldn’t find seats or when the weather is simply too hot. I have also cut down on buying coffee outside along the years once I realise how much i’ve been spending them on. Instead I usually bring my own instant coffee to the office and make them after lunch.
Allocation = 15% of salary
As I mentioned earlier, a long haul once a year is needed to keep my sanity in check. Hence, I save heavily for this fund, only to empty it out for my well-deserved trip.
For some of you, you could consider this as an entertainment fund. All work and no play makes Jack a dull boy. In life, whenever possible, do try to put aside some monies for enjoyment.
Allocation = 20%
Mini Home Crisis Fund
For those who have owns an apartment, you are probably familiar with this. For those who are still waiting for the BTO or your apartment, this fund is needed, stat. I learn the hard way after my stove blows right after the warranty period ends. I had to dig into my savings to fix it, and that’s when I realise that I need to set up this mini fund.
My partner contribute equally to this fund, and my savings and I have never been more grateful for my foresight (pat on back) when my washing machine break down after.
Allocation = 10%
Perhaps, the most important of all is that you have a portion saved up. Chinese are known to have a savings culture and I am no different. If possible, I would like to put more of my salary into savings, but alas, this is the best I can maximise so far.
Allocation = 25%
I’m hoping to be able to increase my savings allocation if and when there is a pay raise. Hopefully in the near future >< So this is how I allocate my salary. How about you?