Hi, I just started my first job and settled my insurance. But I am still struggling to manage how to allocate my salary.. I’ve heard of the 50-30-20 rule, but how do I know what works for me? - Seedly
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Anonymous

Asked 2w ago

Hi, I just started my first job and settled my insurance. But I am still struggling to manage how to allocate my salary.. I’ve heard of the 50-30-20 rule, but how do I know what works for me?

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It's a general rule which means some might not fit into this rule. Still, there is no need to be concerned as all of us have different financial situation, liabilities, responsibilities and etc.

You can use it as a guide but don't get disheartened if you did not meet this rule.

Rather than focusing to fit into that rule, this is what I would do:

  1. Get a budgeting app that is user friendly which shows you in the graphical format of expenditure like a pie chart (I am using Wallet by BudgetBakers which have both desktop and mobile platform)

  2. Set aside an amount for categories like food

  3. Diligently record every single transaction you made in the app. As long as the money goes out of your bank account or wallet, record it.

  4. Review on a monthly basis of your expenditure.

It took me about 3 months to fully understand my expenditure pattern.

Once you know your spending pattern, it would be easier for you to plan as you have the numbers to work on.

Most expenses like insurance, telecom and subscription are pretty fixed unless you upgrade it.

Example of an expense that can vary is food as you know, celebration and gathering can make you spend quite a bit (but it's fine if it is once in a while)

At the same time, if you decide to engage in a financial planner, these numbers definitely make the planning a whole lot easier.

You should identify expenditure that can be reduced like food and shopping which is why you should set a monthly budget and stick with it. Most of the budgeting app including Wallet does allow you to set a budget and even prompt you if you are close to hitting the limit.​​​

2 comments

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Question Poster

1w ago

Hi Wei Keat, thanks so much for this! Never thought about understanding my expenditure pattern. Thanks for sharing this!!
Teo Wei Keat
Teo Wei Keat

1w ago

You're welcome :) All the best for your planning :)
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post
Ivan H H Tan
Ivan H H Tan
Level 3. Wonderkid
Answered 2w ago

It's not the percentage of salary you save but rather remaining committed to saving that absolute sum every month.

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Question Poster

1w ago

Thanks for this Ivan!
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
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Aik Keong Koh
Aik Keong Koh
Level 4. Prodigy
Answered 2w ago

That's a general rule for those that have no idea how or where to start. It's like a starter guide for personal finance. It's a good guide but you don't have to follow it exactly.

When I started out, there wasn't a guide though. So what I did was set a weekly and monthly budget. Start by budgeting out what you need to spend, transport, food, phone bills, etc. You need to visualise what are the needs and 'must pay' so as to achieve your work responsibilties. End of the day, if you can't do your work, you won't have the money coming in.

Next is to figure out how much you will save and invest before deciding on what you want to spend. Don't try to save or invest too much that you miss out on all the fun, don't have too much fun either. Review and reflect what you enjoy doing outside of work. Do those activities cost money? Can you afford it on a long term basis? Is there a cheaper way or alternative? The main thing is to maximise your time and money on the things you enjoy. Last of all, can you monetise what you enjoy doing? If you can or if your job allows, then work towards that goal. You might find something new about yourself that you never knew.

Do weekly and monthly review. Check if you have met your weekly and monthly budgetted amounts. Where should you cut back if you have overspend? What can you give up? Are you able to increase your income with a side hustle or invest to have some passive income? Tweak it according to your preferences and once you get the hang of it, you can make more aggressive changes later on.

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Question Poster

1w ago

Hi Aik Keong, thanks so much for sharing this, really appreciate it! Never occured to me to do monthly or weekly reviews... Will definitely try it out! Thanks again!
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post
Daniel Kok
Daniel Kok
Level 5. Genius
Answered 2w ago

Don't be too worried about the %! Because everyone's income and commitment is very different.

if you are just starting out as a fresh grad, your income might be lower thus resulting in higher % of expenses.

so long as you are setting a sum of money to save and invest every month, you're on the right track! :)

2 comments

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Question Poster

2w ago

Hi Daniel, thank you for your kind words! Appreciate it!
Daniel Kok
Daniel Kok

2w ago

You’re most welcome! Keep going!
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post
Guo Wei
Guo Wei
Level 4. Prodigy
Answered 2w ago

Hi Anon,

Great work settling your insurance right away!

Firstly, I would plan out an excel sheet to track the necessities and expenses for the month ahead.

Thereafter, depending on the percentage of your expenses, you can then draft out your percentage for savings!

Here is also why you shouldn't hard follow the 50-30-20 rule!

https://thesimplesum.com/why-the-50-20-30-rule-sucks/

1 comment

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Question Poster

2w ago

Hi Guo Wei, thanks for sharing! Ahh that makes sense, how the 50-30-20 is for people starting out!
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post
SW
Shaun WQ Lim
Level 8. Wizard
Answered 2w ago

If you really want to follow the rule:

You need to look at your expenses and categorize them.

Then add them up in total and check what is the percentage of expenses to your take home pay.

If it is more than 50%, means your expenses might be higher than the rule. So you may want to review your expenses to cut down on some.

Then look at the savings and investment portions and see how you want to allocate them.

If you find that you prefer YOLO-ing, then no rules apply. 🤗

1 comment

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Question Poster

2w ago

Hi Shaun thanks for sharing! Will consider the above (minus the YOLO) HAHA! Student loan doesn't allow for YOLO cries
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post

Hi Anon!

Firstly, congrats on the job! 🎉 Hope you’re learning loads!

💰With regards to the 50-30-20 rule, it’s basically a guideline for allocating your salary

  • 50% will be set aside for expenses

  • 30% will be set aside for investment

  • 20% will be set aside for savings

But of course, the 50-30-20 allocation is only a guide and you can always adjust the percentage of allocation according to your needs and requirements.

There is no hard and fast rule to this, some months you might need to purchase a big ticket item, so to counter that, on months that you’re able to cut on your expenses, challenge yourself!

Since you just started your first job, you can start with 50-30-20, and see if you can eventually push yourself to 40-30-30. Or even 20-40-40! 📊

One tip would be to have designated bank accounts, for example having one account strictly for expenses, one for investments and one for savings.

And of course, you can always use the Seedly app to track your expenses (and use it to ask these important questions on our SeedlyCommunity 😉)!

Adulting is tough, don’t worry you’re not alone! We’ll work through it together! All the best! 👍

1 comment

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Question Poster

2w ago

Hi Rachelle, thanks for sharing! Appreciate it, will start with 50-30-20 and hopefully work towards 40-30-30! 👍
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post