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Creating A Budget - A Guide to Tracking Income and Expenses

Personal Budgeting – Debunking the Myths and Empowering Your Finances

Mastering the ability to draw up a personal budget is an important life skill for effective management of your “everyday” money. It involves making informed decisions about how you spend and save your money on a day-to-day basis, as well as how you invest to achieve your longer-term financial goals.

Before unlocking the “secrets” of this simple yet powerful tool, let’s dispel some common myths surrounding budgeting.


Myth: Budgeting means sacrificing all the fun and enjoyment in life

Truth: Budgeting is not about restricting yourself. It is about allocating your money intentionally. Having a budget helps you find your balance between short-term wants and long-term financial stability. When you follow your budget, you align your spending with your expectations and priorities.


Myth: Budgeting is only for those with lower-income

Truth: Budgeting is for everyone, regardless of income levels. It is a tool to help you make the most of your hard-earned money.


Myth: Budgeting is complicated

Truth: Budgeting does not require complex financial knowledge. You don't need to be a financial expert to create and follow a budget successfully. Once you understand how easy it is to draw up a budget, you can use any of the numerous free mobile apps available that offer ready-to-use budgeting templates, making it even easier to monitor and track your spending habits.


To get started, just follow these 3 simple steps:

Step 1: Plan  -  Step 2: Monitor   -  Step 3: Review  -  Repeat.


Create a comprehensive monthly spending plan by taking into account your take home income, listing all expenses, and allocating how much to set aside for savings. Don’t forget about saving up for a fund for fun and entertainment, too!

You can categorise your expenses into loan commitments, priority bills, household expenses and personal expenses.


Once your budget is in place, make a conscious effort to spend according to your planned budget. Keep track of your expenses by using a spreadsheet or mobile app. These tools help you record and categorise your expenditures, making it easier to monitor your spending habits.

By regularly monitoring your expenses, you can identify areas where you may be overspending and finding opportunities to save.


Adhering to your budget and monitoring your expenses is not enough. It is also important to review your finances regularly.

Compare your actual expenses to the budgeted amounts on a weekly or monthly basis. If you find that an actual expense exceeds the budgeted amount, take it as a signal to adjust your spending in that category. Look for ways to reduce expenses or reallocate funds to as necessary to keep total spending within your income.

By actively reviewing and adjusting your budget, you exercise control over your finances and ensure that your spending aligns with your needs and wants.

Schedule a time, maybe every six months, to revisit your financial goals as well. Life circumstances can change, so your budget may need to be adjusted accordingly.


By embracing the PMR approach to budgeting, you take an active role in managing your finances, making informed financial decisions, and staying accountable.

Remember, starting to do budgeting is just the first step. Strive to establish a consistent budgeting practice, and you’ll develop healthy financial habits that will serve you well over time. It also allows you to take control of your money, avoid unnecessary debt, and save for the future.

By maintaining consistency and commitment to planning, monitoring, and reviewing your budget, you lay a solid foundation for managing your finances effectively for long-term financial success.

Credit Counselling Singapore

Published 14 July 2023.