You will choose one budgeting method and write a full budget for next month from your real numbers.
Wei Ling has three months of spending written down and wants a budget for next month that she can keep. She has to pick one of the four methods the module has covered, zero-based, envelopes, percentage splits or pay-yourself-first, and build the budget from her own numbers.
You do the same: choose one method and write next month's budget with it. Aim for a budget you can live inside for a month, because an ambitious budget abandoned by the second week teaches nothing. Before you start, have your spending picture from lesson 1.4, your lowest normal take-home pay from lesson 1.1, and about 30 minutes.
Choose by how you think and how much time you will give it. Zero-based (lesson 2.1) suits people who like detail and whose spending has many parts. Envelopes (lesson 2.2) suit people who overspend in two or three places and want limits they can see. A percentage split or pay-yourself-first (lesson 2.3) suits people who want as little tracking as possible and have stable fixed costs.
Then write one sentence on why you chose it. A month later you judge the method against that sentence, and without it you will only remember whether the month felt good.
Wei Ling's figures throughout are made up for the example. She chooses zero-based because S$290 a month vanished without a job and she wants every dollar named. Farhan chooses envelopes and uses only two of them, because food and rides are the only places he goes over budget.
At the top of the page, write your lowest normal take-home pay: your lowest regular net monthly pay, leaving out any month with overtime, a bonus or a commission spike. For Wei Ling that figure is S$3,800 a month.
Under it, copy in your three-month averages for every sub-category exactly as they are, without adjusting any of them yet. If your eating out averaged S$520, write S$520, even if you think it should be S$300. The budget starts from what you actually do and moves from there. A budget that starts from a target is usually a wish, and you will miss it from the first weekend.
Decide your future you amount before you touch needs or wants. It covers saving, extra debt payments and anything for the buffer, and it is the one line you protect. Leave needs as they are when they cannot be changed this month. Subtract future you and needs from take-home pay to find what is left for wants, then compare that with what you spend on wants now to find the gap.
Wei Ling currently saves S$100 a month and tries S$600 as her first future you figure. She keeps needs at S$2,160 because she cannot change them this month. S$3,800 minus S$600 minus S$2,160 leaves S$1,040 for wants, against a current wants average of S$1,250, so she is S$210 short.
If your gap is huge, lower the future you figure until the gap is within reach. A smaller amount you actually move is worth more than a large one you raid in week three.
Close the gap by changing no more than three categories. Changing more than three means running a different life from the one in your spending picture, and the plan will not hold. Choose the categories where your guess and the real figure in lesson 1.4 were furthest apart, since those are habits you did not notice and they are the easiest to change.
Wei Ling takes her three biggest surprises from lesson 1.4. Eating out goes from S$520 to S$420, saving 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 frees S$240, which covers her S$210 gap with S$30 to spare. She leaves shopping and subscriptions as they are for now, since Module 4 looks at them properly.
Run the check for your method before you call the budget finished:
Zero-based: the total of all lines minus take-home pay must be exactly zero, and any spare money gets a job. Percentage split: check each bucket against its share. Envelopes: write the amount going into each envelope and where the rest of the money goes. Pay-yourself-first: write the payday transfer and check that what remains covers needs with room for wants.
Wei Ling's budget is zero-based, so the spare S$30 needs a job, and she adds it to future you: S$600 + S$30 = S$630. Her wants are S$1,250 minus S$240, which is S$1,010. Her final budget is needs S$2,160, wants S$1,010 and future you S$630, and S$2,160 + S$1,010 + S$630 = S$3,800, so her lines minus take-home pay come to exactly zero.
Her future you line of S$630 is about six times the S$100 she saved before. It has no destination yet, and Modules 3, 5 and 6 will divide it between yearly costs, debt and her buffer.
Your finished budget fits on one page. It shows the method and your one-sentence reason, your take-home pay at the top, every category with its amount, and the three changes marked so you can watch them during the month.
Open your spending picture next to a blank sheet and start with your sentence.
Write next month's budget using your chosen method, with every category and amount, and the three changes you are making from your current spending.
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