You will be able to rank your spending by how much you value it and target cuts at the bottom of the list.
Wei Ling wants to spend less on her wants, and her monthly budget from lesson 2.5 has five want categories to work with. The obvious approach is to shave a little off each one, and that approach is the one most likely to fail.
The usual way to cut spending is to take a small, equal amount from every category: ten percent off eating out, shopping and rides, plus fewer coffees. It feels fair and balanced, but it almost never lasts. By about the third week, every part of life feels a bit worse, nothing feels much better, and the old spending comes back one category at a time.
Two problems cause this. First, an equal cut removes things you enjoy along with things you don't care about. Giving up a dinner with friends you were looking forward to and skipping a delivery order you barely remember both count as cutting back, but they cost you very different amounts of happiness. Second, an equal cut is hard to keep up. A ten percent cut to eating out means deciding at every meal whether this one is part of the ten percent. That adds up to dozens of small decisions a month, each of which feels like a loss, and people run out of patience for them long before they run out of reasons to save.
A better method starts with a question about value rather than size. To rank by value, take each want category and ask how much it adds to your life. Leave out what it costs and whether you think you should enjoy it, and judge it honestly for yourself. Then put the categories in order from most valued to least valued. Size has no effect on the order: a large category can sit at the top and a small one at the bottom.
Wei Ling's ranking, with her monthly budgets (example figures), looks like this:
Eating out, S$420 (rank 1). Dinners with friends are the main way she sees them, and she would give up almost anything else first. Rides, S$100 (rank 2). A Grab home after a late shift gets her home safely and gives her an extra hour of sleep. Shopping, S$280 (rank 3). She enjoys it sometimes and regrets it sometimes. Subscriptions, S$60 (rank 4). Four streaming and app services she only half uses. Delivery, S$150 (rank 5). She admits she orders mostly when tired and bored, and rarely enjoys it.
Her biggest category is at the top of the list, and her third biggest is at the bottom.
Once the list is ranked, the rule is to cut deeply in the lowest-ranked categories and protect the top two. A deep cut is a real, substantial reduction, more than a trim. Categories that give you little can be cut hard at little cost to you. To protect a category means its spending stays as it is, or grows if the plan allows, and you spend it without guilt because you have already decided it is worth it. Middle categories get a modest trim or are left alone.
Wei Ling caps delivery at no more than S$100, a third less than S$150. She plans to cut her subscriptions from four services to one or two. Eating out stays at S$420 and rides stay at S$100, and she keeps both without guilt. Shopping, her middle category, she leaves for a closer look in the audit in lesson 4.5.
The aim is a budget that survives, and this has nothing to do with indulgence. A plan that removes every pleasure feels like punishment, and people quit punishments after a bad week. A plan that keeps what you love and cuts what you wouldn't miss feels like your own choice, so you are much more likely to still be following it in month three. Keeping some spending you love is part of the plan.
Other people also don't need to know you're on a budget. Your protected spending stays visible as normal while the low-value spending shrinks quietly. Wei Ling's friends see her at dinner as usual, and nobody notices her delivery spending getting smaller.
The ranking makes future decisions quicker too. When something new tempts you, ask where it would sit in your ranking. If it would sit near the bottom, the answer is usually no, and there is no need to agonise over it.
Start with your spending picture from lesson 1.4 and the want categories in it. For each one, ask how much it actually adds to your life, ignoring its cost and whether you feel you should enjoy it. Rank them from most valued to least. Cut the lowest-ranked ones deeply, protect the top two, and give the middle a modest trim or leave it alone.
Open your spending picture, list your want categories, and rank them by what each one actually gives you.
Rank your want categories from most to least valued and mark the two you will protect and the two you will cut hardest.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).