Am I budgeting correctly? Life tips for your 20s and 30s, from two financial experts

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DO I REALLY NEED TO TRACK ALL MY EXPENSES TO BE A GOOD BUDGETING?

Budgeting can be intimidating for some – especially when there are stories of people writing down everything they spend, including the bowl of noodles they ate for lunch – but, Tan said, it can. made to be very simple.

His advice: Open three bank accounts – the first, to credit your salary; the second, for expenses; and the third, for savings. “Each month you automatically transfer the amount you need for (fixed) expenses to one account and the amount you want to save to the other,” he said.

As long as your discretionary spending is within the limits of what’s left in your payroll account, this will ensure that you don’t overspend.

What if you were married, like Png? He and his wife keep two accounts – a joint account to which his salary is credited and his wife’s account which serves as their savings account.

Tan said married couples who want to budget together can have four accounts in total – one income account each and two joint accounts, one each for saving and spending.

“Don’t let your savings get mixed up with your spending account because once it does, it’s very difficult to draw a line when you spend,” Ong said.

“It can also be very rewarding and encouraging to see your savings account levels increase,” she added. ‘

If you have annual recurring payments like insurance premiums or road taxes, Tan suggests dividing those expenses by 12 and setting aside the money you need each month. This way, when payment is due, the money has already been allocated.

HOW MUCH SHOULD I SAVE EACH MONTH? WHAT IF I HAVE A BIG PURCHASE COMING SOON?

A good guide for this would be to save 15 percent of your gross income, Tan said.

Ong said the ratio recommended by the Institute for Financial Literacy is 10 percent of net income, but of course, more is better.

But what if, like Jasmine, you have big ticket items like a house or an upcoming wedding? She hopes to have at least S $ 50,000 for her marriage fund, equally between herself and her partner, by 2023.

The first step for any couple, Ong said, should be discussing what they expect for the wedding, what their budget should be and whether it is a realistic goal. Once that is settled, they should then create a joint wedding expense account and each commit to paying a fixed amount into the account each month.

As for buying a home, which is on the cards for both Png and Jasmine, couples need to make sure they can afford the mortgage in the long run. MoneySense advises that the lump sum purchase price should not exceed five times the annual household income; and that their mortgage service ratio should be less than 25 percent of their gross monthly income.

An HDB apartment built to order would generally cost them less than a resale apartment. And the latter could also force them to spend more on renovations, Ong noted.

Renovation costs must be budgeted; if they take out a loan for it, it will be “added debt,” she said. Her advice to people like Jasmin, who additionally has a wedding to plan: “If finances only allow them to do a basic renovation right now, they can always add things along the way. “


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