URUS bersama Suraya | 4 Beginner-Friendly Ways to Start Budgeting Your Money

Four Beginner-Friendly Ways to Start Budgeting Your Money


“Budgeting” is a common money advice, but did you know that there are different ways to budget your money? Some people love making it simple, while others feel more in control with a more complex system.


Here are four ways to do budgeting, ranked from easiest to more complex. As a general rule, the more scared you are to face your finances, the easier your budgeting system should be. Take note though that “easy” and “complex” can be subjective — if you are someone who finds Excel for budgeting fun and easy, then go for it!


#1 - The 50/30/20 Budget

How it works: After deducting contributions to Employee Provident Fund (EPF), Social Security Organisation (SOCSO) and monthly tax payments, divide the remaining of your salary into three portions: 50% for needs, 30% for wants, and 20% for savings.

  • Needs are things like: housing (mortgage or rent), groceries, transportation (car loan, petrol, parking, etc.), bills and utilities (electric and water, among others), insurance or takaful and other necessary costs.
  • Wants are things like: travel, entertainment, restaurant dining, shopping and hobbies.
  • Savings are things like: paying off debt (especially credit card and personal loans), PTPTN, short-term savings goals, investments, and more.

For example, let’s say you earn RM3,000 after deducting contributions to EPF, SOCSO and monthly tax payments. Your 50/30/20 guideline should then be RM1,500 for Needs, RM900 for Wants and RM600 for Savings.

It is important to remember that the ratio is completely adjustable; for example, you might be living at your parents’ home and using public transport, so you can afford a higher savings rate. In this case, you can do 50% savings, 25% needs and 25% wants.

For people with higher commitments, you might find yourself spending 100% of your salary on needs and 0% on savings. In this case, start with saving 1% of your salary, and slowly increase as you improve your financial situation.

The 50/30/20 Budget is excellent when paired with the “pay yourself first” rule — when you get your salary, transfer 20% of your salary to your savings first. This way, you do not have to worry about emptying your bank account as you have already sorted out the savings part!


#2 - The Cash Envelope System

How it works: This is a cash-only budgeting method. You place literal cash in literal envelopes, each earmarked for different expense categories, and only spend from there. If the money is gone, the spending stops.

The Cash Envelope Method is great for ‘overspenders’ who may not want to cut a fun expense out totally, but want a way to limit their spending. For example, you could put RM100 in an envelope labelled Restaurant and RM50 in an enveloped labelled Clothes to curb your overspending on outside food and clothing. After the money runs out, you simply wait for next month, when the envelopes are replenished.

Using physical cash is the best way to do this budgeting method because there is something about handing over cash that increases one’s awareness and mindfulness during financial transactions. However, in this pandemic age where e-wallet usage is more common and better for hygiene reasons, you can also create digital envelopes — create different accounts in your phone and earmark each of them for different payments (for example, using Boost wallet ONLY for entertainment).


#3 – Expense Tracking

How it works: This budgeting method is suitable for people who like making notes and knowing exactly where their money goes. Expense tracking works as it sounds — you record and track every sen, categorising them under their relevant expense categories. Periodically, you review the data and make spending adjustments in the following month.

You can do expense tracking manually (on paper) or via expense tracking apps. There are also some e-wallet accounts such as MAE by Maybank and BigPay with integrated and automated expense categorisation features!

Expense tracking is great because there is an element of shock factor that tends to work for behavioural change, as data do not lie. For example, if you found that your expenses under the “Eating Out” category exceeded an amount you’re comfortable with last month, then you may adjust your behaviour by making time for meal planning and prepping for next month.


#4 - Excel spreadsheet

How it works: Budgeting with an Excel spreadsheet is similar to expense tracking but better for people who enjoy personalising their data. You can start one from scratch, but there are many Excel-based templates you can find online, not just for budgeting but also for investment tracking and so on.

One of the more popular templates is called Zero-Based Budgeting which carries the tagline “give every dollar a job”. It is a great template to download as it gives a great overview of one’s financial life, including income sources, bills, debts, daily living, savings and more.

Tip: Google also has a free monthly budget template. You can find it at the Template Gallery in the Google Sheets programme.


Which budgeting type do you apply?

Most people start budgeting their money with one of the above and eventually incorporate a little bit of each. For example, someone might use the 50/30/20 guideline to automate the transfer of 20% of their salary to a savings/investment account, use the Cash Envelope system to only limit their spending on non-essential expenses and use an Excel spreadsheet to keep track of their overall finances.

Lastly, do not be intimidated by extremely complicated budgeting systems that you see people use — start simple, and learn more from online sources. There are various YouTube tutorials that are extremely informative (and entertaining to boot!). Using the one that works better for your personality will make budgeting habits easier, thus helping you achieve specific goals, like paying off debt, sooner.


This article is contributed by Suraya Zainudin—writer, speaker and digital marketer for one of Malaysia’s top personal finance websites.


The opinions expressed in this article are those of the author and do not necessarily reflect the views of the Credit Counselling and Debt Management Agency (AKPK).