You will audit one month of your spending and make a list of specific cuts, each with its monthly value.
Take the most recent complete month of your own transactions and mark each one as valued, neutral or not worth it. Then use what you find to write three to five specific cuts, and send the money they release to one named goal. A spending audit like this takes about 30 minutes. It uses the work you did in lessons 4.1, 4.2 and 4.3 on real numbers.
Wei Ling, the course's example person, runs hers on February.
Open your tracking for the last full month and insert a new column next to the transactions. Each transaction gets one of three labels. Valued means you're glad you spent the money and would spend it again. Neutral covers spending that is necessary or unremarkable, and rent, groceries and MRT fares tend to sit here. Not worth it is anything you'd prefer to have back as money.
Work fast. Your first reaction to a line is usually the honest one. If you find yourself making a case for a purchase, it belongs in neutral at best.
Wei Ling marks dinners with friends as valued, along with a Grab ride home at 1am after a late shift. Rent, groceries and her phone bill go in neutral. She marks three things as not worth it: three delivery orders on tired evenings, two impulse buys from a sale and two subscriptions she never opens.
Filter the new column so it shows only the not-worth-it rows, then add them up. The result is your not-worth-it total. It is the amount the month could have saved if you had spent only on things you valued or needed.
Wei Ling's comes to S$290 (an example figure, like all of hers). It is made up of S$85 of delivery orders, S$96 of impulse shopping, S$31 on the two unused subscriptions, S$38 on rides where the MRT would have done, and S$40 of small purchases she had forgotten about. If that happened every month, S$290 x 12 would be S$3,480 over twelve months.
Many people are surprised when they see their own figure. A few find less than they feared, but most find an amount that would make a difference across a year.
You won't save the full total, because part of it was one-off spending and part came from a bad week. Pick out the spending that repeats and turn it into changes you can name, each with a monthly amount.
A cut states the category, the change and the monthly amount. A cut like "spend less on food" is too vague to last. A cut like "delivery capped at S$100" is specific enough to stick. Two good places to look are the recurring bills you reviewed in lesson 4.2 and the frictions you chose in lesson 4.3. Keep your top-ranked wants from lesson 4.1 off the list completely.
Wei Ling writes four cuts:
Subscriptions, S$60 down to S$25: she cancels two services and downgrades one, saving S$35. Shopping, S$280 down to S$200: she applies the one-day and one-week waiting rule from lesson 4.3, saving S$80. Delivery, S$150 down to S$100: she orders only at weekends and splits orders with her flatmate, saving S$50. Phone plan, S$30 down to S$15: she changes plan when her contract ends in February, saving S$15.
S$35 + S$80 + S$50 + S$15 adds up to S$180 a month. That is below her S$290 not-worth-it total, and that is fine, because cuts you can keep up are worth more than a bigger number you'll break. Her two highest-ranked wants from lesson 4.1 were eating out with friends and late-night rides home, and neither is on the list.
Step 4 is sending the freed money to a goal, and it decides whether your cuts last. Money you free up and leave in an everyday account usually gets spent again within weeks. Give it a named destination and, if you can, set up a transfer that moves it out on payday. Choose one goal for all the money your cuts release.
Before the audit, Wei Ling had S$300 a month of future-you money left after her sinking funds. Adding the S$180 brings that to S$480 a month. She decides it goes first to a small starter buffer and then to her credit card balance. Modules 5 and 6 work out exactly how her S$480 is divided and in what order.
Once you've chosen your goal, change your budget to show the new amounts. Wei Ling's budget now has needs at S$2,145, wants at S$845, sinking funds at S$330 and future you at S$480, a total of S$3,800. Her needs dropped by S$15 because the phone plan is counted under bills and premiums.
When you've finished, you will have five things: the month's transactions with a label on each one, your not-worth-it total, three to five cuts with monthly amounts, one named goal for the freed money, and an updated budget.
Go back to your most recent full month and label the first transaction.
Finish the audit. Then list your cuts, with the monthly amount of each and where that money will go now.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).