Choose one budgeting method and write a full budget for next month from your real numbers.
Wei Ling (all her figures are invented examples) has written down three months of spending and wants a budget for next month that she will actually stick to. She needs to settle on one of the four methods covered in this module and work from her own figures.
The methods are zero-based (lesson 2.1), envelopes (lesson 2.2), and percentage splits and pay-yourself-first (lesson 2.3). Whichever you pick, aim for a budget you could follow for a whole month. If you give up on a demanding plan in the second week, you have nothing to learn from.
Get three things together first: the spending picture you made in lesson 1.4, your lowest normal take-home pay from lesson 1.1, and roughly 30 minutes.
Two things decide the method: the way you think about money and how much time you're willing to spend on it each month. If you enjoy detail and your spending is spread across many parts, zero-based fits. If you overspend in two or three particular places and want limits you can see, envelopes fit. If you'd rather track as little as possible and your fixed costs stay steady, a percentage split or pay-yourself-first fits.
Wei Ling goes with zero-based. Each month S$290 disappeared without any job attached to it, and she wants a name on every dollar. Farhan goes with envelopes and keeps just two of them, since food and rides are the only areas where he goes over.
Once you have picked, write a single sentence giving your reason. When the month is over, you measure the method against that sentence. If you skip it, all you'll recall is whether the month felt good.
The first line of the page is your lowest normal take-home pay. This is the smallest regular net amount you're paid in a month, ignoring any month boosted by overtime, a bonus or a commission spike. For Wei Ling that is S$3,800 a month.
Below it, list every sub-category with its three-month average, copied straight across with no changes at this stage. Say eating out averaged S$520 (an example figure) and you feel it ought to be S$300: you still write S$520. You start with your real behaviour and adjust from there. A budget built around a target figure tends to be a wish, and it usually breaks on the first weekend.
Fix your future you amount before you change anything under needs or wants. This line holds saving, extra debt payments and whatever goes to the buffer, and it is the one line you protect.
At the moment Wei Ling saves S$100 a month. For her first attempt at future you she tries S$600. Her needs total S$2,160 and none of them can change this month, so she keeps them at that figure. Treat any of your needs that are fixed for the month the same way.
Next, take future you and needs away from take-home pay to find what wants can have, and set that beside what you spend on wants now. Wei Ling's sum is S$3,800 minus S$600 minus S$2,160 = S$1,040 for wants. Her wants currently average S$1,250, so she is S$210 short. That shortfall is the gap: the difference between what is left for wants and your current wants spending.
When the gap looks huge, bring the future you figure down until the gap is one you can close. Moving a modest amount every month does more for you than setting aside a bigger one and raiding it in week three.
Change no more than three categories to close the gap. If you alter more than three, you are planning a life quite different from the one your spending picture shows, and that kind of plan does not last. Choose the categories where, in lesson 1.4, your guess sat furthest from the real figure. Those are habits you hadn't noticed, and they are the easiest ones to change.
Wei Ling uses her three biggest surprises from lesson 1.4. She brings eating out from S$520 to S$420, which saves S$100. Delivery goes from S$240 to S$150, saving S$90, and rides go from S$150 to S$100, saving S$50. Together S$100 + S$90 + S$50 = S$240 freed, which covers the S$210 gap with S$30 to spare. Her wants line becomes S$1,250 minus S$240 = S$1,010. Shopping and subscriptions stay as they are for now, since Module 4 deals with them properly.
Before the budget counts as finished, run the check that belongs to your method:
Zero-based: all lines added together, minus take-home pay, must come to exactly zero, and any spare money is given a job. Percentage split: compare each bucket with its share. Envelopes: write down what goes into each envelope and where the rest of the money goes. Pay-yourself-first: write down the payday transfer and confirm that what is left covers needs with room for wants.
Wei Ling gives her spare S$30 a job on the future you line, so S$600 + S$30 = S$630. Her budget now reads needs S$2,160, wants S$1,010 and future you S$630. Adding them gives S$2,160 + S$1,010 + S$630 = S$3,800, and taking away take-home pay leaves exactly zero. The S$630 is about six times the S$100 she was saving before. It does not have a destination yet. Modules 3, 5 and 6 will split it between yearly costs, debt and her buffer.
Keep the whole budget to one page. On it go your method and your one-sentence reason, take-home pay at the top, each category with its amount, and your three changes marked so you can keep an eye on them through the month. When the month ends, go back to your sentence and judge the method by it.
Open your spending picture beside a blank sheet and begin by writing your sentence.
Write next month's budget with your chosen method. List every category and amount, and mark the three changes from your current spending.
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