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13 Apr 2020 


Have you been putting off plans to save for your future because you are unable to pick a budgeting method that fits your lifestyle and spending habits? 


Here are 3 budgeting methods for you to take a gander at –– find one that you’re most comfortable with!

An infographic on 3 budgeting methods

1.  The Envelope System

The Envelope System calls for you to divide your monthly wages into labelled envelopes like “groceries”, “food”, “transportation”, and limiting yourself to spending only what you have allotted for each category.

First, determine how much you have available after setting aside money for savings and paying your bills. Divide this amount across different spending categories, for example: groceries, food, entertainment, transportation and gifts.

For the rest of the month, limit your spending in each category to only what you have allocated to it. You are not allowed to draw from other "envelopes" or your savings, even if you run out of money in one category. This keeps you disciplined with your expenses and prevents you from overspending! 

In this digital age, instead of using physical envelopes, you can leverage budgeting apps to carry out your budgeting plan!

2.  The 50/30/20 rule


This popular budgeting system is simple and easy to use. Once you receive your monthly wages, split them up accordingly –– 50% of your wages should be allocated to your needs, 30% to your wants and 20% to your savings and investments.

This ratio is only a suggested rule of thumb. As you know your financial situation best, you can choose to allocate more or less to each category. For example, if it suits your lifestyle better, you can channel 40% of your wages to needs, 40% to wants, and 20% to savings.

3.  Zero-sum budgeting


In zero-sum budgeting, you assign a 'job' to every dollar of your monthly wages. It is to ensure that every dollar is accounted for — works great for those who love to plan everything down to the details!

Take stock of your monthly wages, then assign a purpose to your dollars — this includes paying for bills, savings, groceries, food, entertainment, etc. After dividing your wages across each of these 'jobs', you should be left with nothing. 

This makes you pay attention to where every dollar is going. 

With a proper budgeting plan in place, you'll be able to meet your current needs while setting aside money for your future needs! 

When planning your savings for your future, learn how your monthly CPF contributions help you prepare for various needs such as housing, healthcare and retirement. Get to know how your CPF savings are allocated and the ways you can tap on them here!

You can also take your savings further with your CPF Special Account (SA), which earns higher interest than most bank savings accounts, with interest rates of up to 5% p.a.1. You can consider topping up your SA with some of your savings, and leverage the power of compound interest to grow them for your retirement needs! 

1​ Includes extra interest, which is paid by the Government, on the first $60,000 of a member’s combined balances. Read more about CPF interest rates here.​​


Information in this article is accurate as at the date of publication.