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How To Start A Budget Plan You Can Actually Stick To

We might be hardwired to fail when it comes to budgeting, but in the end, it’s all about finding a plan that works for you.

Most budget plans have the lifespan of a snowball in a microwave. Unlike, say, corporate institutions. It’s psychologically proven that human beings are terrible at following even the simplest budget because your brain associates the word budget with deprivation, which is something we don’t seem to have the motivation or willpower to maintain in the long-term.

That means you may have try out different budgeting methods until you find one that works:

Why we can’t just give you a magic formula?

Everyone is psychologically different. A budgeting method that’s easy for one person, may be an unmanageable nightmare for another. Some people like tracking their daily expenses on a spreadsheet, while others would rather rub their eyes with a fork.

So instead of giving you all a single method, here are some different ones to try:

  • Zero-based budgeting
  • Values-based budgeting
  • No-budget budgeting
  • Percentage breakout budgeting

Zero-based budgeting

This form of budgeting follows the adage that what gets measured gets managed. This means every single dollar is accounted for and serves a purpose to prevent waste. Zero-sum budgeting also says that you should use the previous month’s real income to pay this month’s expenses.

Using this method, you start by tracking all your expenses for the past three months. By all your expenses, we mean literally recording them in a spreadsheet or even stapling your receipts into an expense booklet if you have to.

Next, you need to keep track of where any unspent money is kept. For example, you need to know there’s SGD X in each if your bank accounts, and SGD Y in digital wallets such as DBS PayLah! or PayPal.

If you do this right, there must be zero difference between the expenses, and the income for each month. Don’t worry if it doesn’t tally up as most people don’t get it right the first time, so you may have to keep at it for a few more months until you get the hang of it.

Once you have the expenses for the past three months, you can switch to future planning instead.

Look at the previous months’ budgets, and plan the next month’s budget based on that. After setting aside (on a spreadsheet) the money for fixed costs such as utility bills and the mortgage, set aside costs for things like birthdays, or vacation budgets.


The upside to zero-based budgeting is that you become very aware of recurring expenses, such as a rising power bill, or increasing insurance premiums. Most people let this slip by, as they don’t notice such costs.


There’s a high level of burn out with this kind of budgeting. A lot of people can’t handle tracking and planning every expense over a prolonged period. You can do it for a few months, sure…but how about after two or three years.

Values-based budgeting

The philosophy here is that budgeting should enable you to live the life you want, not act as some kind of money-based jail.

Start by listing the costs of everything important to you. For example, say it’s super-important to you to be able to go on vacation every three months or even further your studies. In that case, you’d start by tracking the cost of these things – take note of how much you typically spend on such activities.

Next, add the cost of these activities, onto the cost of expenses such as your mortgage, utility bill, insurance premiums, food, etc.

After that, set aside at least 20 per cent of your income as savings (check out our article on how to save if you’re bad with money).

Any remaining money is your discretionary income, to spend on whatever takes your fancy.


Many of us spend money on things we don’t really want.

Don’t believe us?

Think about it: how many times have you spent SGD 250 on impulse shopping, when what you really wanted to save for a vacation? Or how many times have spent SGD 15 on junk food, when you’re a foodie and should have saved that up for a Michelin-star meal?

This budget prevents impulse spending from crowding out what’s really important to your life.


Be careful not to go overboard. Don’t budget so much for your passions that there’s nothing left over for savings, or for long-term investment

No-budget budgeting

This is the easiest way to budget. You set aside 20 per cent of your income at the start of each month, for savings. After that, pay all your bills for the month, and spend the rest however you like.


It’s easy.


This method is makes you susceptible to things that other budgets address. For example, unlike zero-based budgeting, you’ll probably be oblivious if your mortgage repayments, power bills, insurance premiums, etc. are creeping up. You can’t take steps to address these things, if you don’t even realise they’re happening.

And unlike values-based budgeting, you may end up wasting a lot of money on useless crap. You could be left wondering why your friends can afford a vacation every quarter, even while you spend SGD 1,200 on unnecessary Grab rides or novelty gadgets.

Percentage breakout budgeting

Also called the 50-20-30 method, this budget means you allocate:

  • 50 per cent of your income to expenses, such as food, clothes, transport, and other essentials (if this is more than needed, then any excess goes to savings).
  • 20 per cent of your income to savings
  • 30 per cent to your various wants, like headsets or a new laptop.

Note that you don’t need to track the previous month’s expenses; you can just pre-plan how you will spend the money for the coming month.


This is somewhere between zero-based budgeting, and no-budget budgeting. You have some control and awareness of the expenses, as you allocate where the money goes. At the same time however, you don’t need to track every dollar with as much discipline as zero-based budgeting.


You still need to track the money, so it’s not as free and easy as no-budget budgeting. More importantly, you should speak to a financial advisor to see if the 50-20-30 breakdown is right for you. This formula might not be right for everyone.

For example, if you have dependents to look after, such as elderly parents, then 20 per cent to savings might be too low.

Speak to an expert at NAV, to see if this sort of budget is right for you.

The best budget is the one you can maintain.

If you find that you’re constantly slipping from the budget, then it’s time to try a new approach. Ultimately, the best budget is the one that you can stick to – not just for a few months, but for years upon years of your life.

Or, if you need a little extra help, check out “Your Financial GPS”, a handy new feature on DBS iBanking and digibank apps. It is integrated into your banking transactional activities and automatically categorises your income and expenses for a full view of your spending for easier money management.

If you missed it, check out part 1 of our series on how to get started with financial planning and part 2 on savings!

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