You will be able to sort a list of transactions into needs, wants and future you, with a few sub-categories that show patterns.
A list of every transaction you made last month tells you very little on its own. Scrolling through it gives you a general impression, but it cannot tell you whether your monthly total is reasonable or alarming. The list becomes useful once every line has a label, and the labels you choose decide what you learn from it.
Wei Ling, an invented example, has 214 transactions in one list, which she built in lesson 1.2. When she scrolls through it, she sees a lot of food, a lot of Grab and some shopping. She spends S$3,410 a month and cannot tell whether that is reasonable or alarming.
The three buckets come from lesson 1.1. Applying them to real statement lines takes a few decisions.
Needs are costs you cannot skip without real consequences, such as losing your room, your phone line, your insurance cover or your ability to get to work. They include rent or your share of a home loan, utilities, transport to work, a basic phone plan, groceries and insurance premiums. Minimum payments on any debt are needs too, because missing them brings fees, interest and a mark on your credit record. Money you give your parents each month counts as a need if stopping it would break a promise they rely on.
Wants are choices: eating out, food delivery, taxis and private-hire rides, shopping, streaming and app subscriptions, hobbies and travel. They stay wants even when they feel routine. This is the bucket where people argue with themselves. "I need to eat" is true, and groceries cover that need. A S$14 lunch near the office is a choice about how to eat, so it goes under wants. Calling something a want is not a judgement, and many wants are worth every dollar. Module 4 is about protecting those. The label only records that you could change the spending if you decided to.
Future you is money that pays for your life later: savings transfers, debt payments above the minimum and additions to an emergency buffer. For most people starting out, this bucket is small. Wei Ling's only future you entry is the S$100 she moves to savings each month.
Three buckets show the balance of your spending but not where to act. For that you need sub-categories, which are labels inside each bucket, such as eating out, delivery and rides inside wants. Keep to 8 to 12 in total. Every extra sub-category adds a decision each time you tag a line, and people give up on tracking that asks for too many decisions. If a sub-category holds less than about S$30 a month, fold it into a neighbouring one. If one holds more than a quarter of your spending and mixes several habits, split it.
Wei Ling sets up 12 sub-categories:
Needs: rent, bills and premiums, transport, groceries, parents, debt minimums. Wants: eating out, delivery, rides, shopping, subscriptions. Future you: savings.
She combines her phone plan and insurance premiums into "bills and premiums" because both are fixed and she never changes them. She keeps delivery separate from eating out because she suspects delivery is a habit of its own. She keeps rides separate from transport because the MRT and bus are a need, while a S$16 Grab home after a late night is a choice.
Some transactions will not sort cleanly, and a few patterns cover most of them.
If a purchase is part need and part want, split it when it is large, or put it in its main bucket when it is small. Wei Ling's S$180 supermarket bill includes S$40 of wine and snacks, and she tags it as groceries because most of it is. If a small mixed item like those snacks turns up every week, it is a pattern worth seeing.
A transaction you cannot identify gets a question mark for now. To identify it, search the merchant name shown on the statement, or check the date against your calendar and messages. Wei Ling has 11 lines she cannot place. Of these, 7 turn out to be online shopping on her second card, 3 are PayNow transfers for group dinners and 1 is an annual app renewal.
A large one-off cost goes in its bucket like everything else. You also mark it as a one-off, because it would make your monthly average misleading. In December Wei Ling spends S$450 on a wedding gift and a new outfit for the wedding. She tags it as a want and marks it as a one-off. Lesson 1.4 deals with one-off costs separately.
The first month of tagging is slow because you are making decisions. The second and third months are faster because the same merchants keep appearing. By the end of the first month, most people find their 12 sub-categories cover nearly everything.
Take your list from lesson 1.2 and add two columns, one for the bucket and one for the sub-category. Choose 8 to 12 sub-categories across the three buckets. Fold any under about S$30 a month into a neighbour, and split any over a quarter of your spending that mixes several habits. Then put a spreadsheet filter on the description column, filter for a merchant once and tag every matching line together. Work through the rest line by line. Split large mixed purchases and put small ones in their main bucket. Give lines you can't identify a question mark until you trace them, and mark large one-off costs as one-offs.
Tag each transaction in your list with a bucket and a sub-category, and mark any you are unsure about for a second look.
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