How to Manage Your Money

Having problems with your personal finances? Here's advice on how to set up a household budget, what to do with your savings, planning for retirement and how to best use credit cards. Don’t let your money dictate what you can and can’t do. Take charge. Here’s how.
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.

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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.

Find out more in the magazine:
- Savings and Investment
- Credit Cards and Debt
- Retirement

 Money Tips
Save at least
ten percent of your
salary every month.
Of course, the more
the better
Planning for
your financial future
doesn't need to be
All you need to do
is take the first step.
1. Shop around for credit cards and savings accounts. Compare interest rates and benefits.
2. Don't pay annual credit card fees. Get the bank to waive your annual fees. Especially in places where there's a lot of competition, call the bank and threaten to cancel your credit card.

3. Go online. Many banks waive fees and charges if you pay bills and transfer money online. Some even give better deposit rates on accounts (e-accounts) where everything is done via the internet.

4. Inform the bank if you're travelling overseas or about to make a large purchase on your credit card. Banks might think there's a suspicious charge on your card if your spending pattern changes. The last thing you want is your credit card not to work while you're on vacation.

5. Credit card insurance might be helpful if your available credit limit is high and you want to protect yourself from charges resulting from lost or stolen credit cards. It's cheaper to buy it from an insurance firm rather than the credit card company itself.

6. Read Up. There are many books, magazines and websites to help you brush up on your personal finance skills. Some of them even have online calculators to help you figure out your financial goals. Try, or for a start.

7. Use a 30 day rule to help curb impulse buys. If you want to buy something that is not a necessity, write it down along with the date. Tell yourself you won't buy it until a month later. Chances are, you won't want it as much when you revisit the item on your list.

8. Dollar Cost Averaging is a time-tested, easy way for beginners to invest in stocks and funds. Contribute on a monthly basis. This smoothens out the average cost of your investment by taking into effect fluctuations in the price.

9. Always ask if there's a credit card discount at restaurants, hotels, movie theatres, etc. before playing.

10. Read the fine print on your credit card statements to understand how credit card companies calculate your fees and payement amounts.
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