Now, as per the Ministry of Manpower, the income of an average working class Singaporean for 2016 was 4056 SGD per month, which translates to 48,672 SGD per annum. Thus, your after-tax income or real income as per the Inland Revenue Authority of Singapore is approximately 47,746 SGD. You can then prepare your annual budget through 3 simple steps:
Step 1: The 50
The rule recommends that you set aside at least 50% of your income for your basic essential needs such as housing and related expenses, food and groceries, clothing and the like. It is essential that you differentiate between your “needs” or “must-haves” and your “wants”, at this step.
Anything whose absence would seriously impact the quality of your life qualifies as a “must-have”. On the other hand, anything whose absence would only lead to a minor inconvenience serves as a “want”. Such “wants” should not be taken into consideration at this stage.
Step 2: The 20
The next step focusses on setting aside 20 percent of your remaining funds for debt repayments and saving up in lieu of an emergency or for future retirement. Of course, if you’re fresh out of college, retirement may seem quite far away. However, you could always instead use these funds for your future home or other such investments that you may soon want to make.
Step 3: The 30
The last step focusses on setting aside the remainder of your total real income for satisfying all “wants”. It is this last step of budgeting that differentiates the smart-spenders from the thrifty ones. For instance, although budgeting for categories like groceries and clothing may fall under the initial step. It is important to make note of the type of groceries or clothing that is being considered. Although both Bread and Oreos fall under groceries, Oreos do not qualify as a want.