WalletFriend Wisdom Tip #3: Mr. Income Meets Ms. Spending

Just like most people, we absolutely love pay day and honestly who doesn’t? There is no other feeling like waking up to knowing that your hard earned money will in your bank account soon.

Maybe it’s just us, but knowing pay day is near, we will start to daydream about the little list on “must-buy items” we have created in our head and thinking of rewarding ourselves with the extravagant nasi padang feast that we have been craving for the last month. But shortly after, the bills for fixed expenses arrive and the next thing you know, the wallet is a lot emptier.

To prevent this from happening, we present you the 50/20/30 budget! There are many variations in budgeting, but this is a great start for those who have never done budgeting before. Remember our tip #2? You should have a clearer picture of your overview expenses. Now it’s time to match your income.

In the 50/20/30 budget, the 50% of your income should be allocated to essentials, 20% to savings and 30% for fun stuff or other desired shopping spree. By breaking down into categories, it will help you gain clarity in making better spending decisions that match your income.


The essentials are basically all your fixed expenses such as house rental payments, transportation, school tuition fees, utility bills and partly variable expenses such as food. These items should not exceed 50% of your income.

Then on 20% of your income should go to savings. Why? Your savings could be used for investments, debt reduction or even as an emergency fund.

Personal or fun stuff (however you like to call it) is the most flexible part of this budget as it involves things you do not necessarily need but you buy them anyway. Therefore, if you need a budget cut, this is where you should start.

Remember, the percentages are merely there for you to get started. In the end, it all depends on individual situation and what your income allows. But make sure you allocate enough money in your savings and more importantly, ensure to cover your fixed expenses.

It may be hard at first but always remember it is a necessary step for getting out of the category of ‘living paycheck to paycheck’, while having the benefit to enjoy buying a luxury item from time to time as a reward.

In our next article, we will continue with the topic of spending consciously; being mindful about your spending.