A personal budget is a highly effective tool that will help you open doors to your own financial freedom. Always a work-in-progress, dependent on how your life situation evolves, a good budget flexes its muscles and grows along with you as you get promoted, purchase a home, marry, have children and retire. A great budget will have optimal impact on your financial planning only if it reflects your current affairs calculated with your future goals in mind. So it pays to re-visit your budget regularly and tweak it as your life evolves.

Here are five tips on how to get the most value out of this fantastic financial tool.

  1. Create a budget for the year, not just the month.

By creating a spending plan for an entire year, you’ll include nonrecurring expenses such as birthdays, holidays, insurance premiums and the like in your budget. Forgetting to account for these intermittent expenses, especially if they are costly, can really throw your budget plan into chaos.

When creating a budget, look beyond your monthly bills. Be sure to consider any expenses you pay on a  quarterly, bi-annual or annual basis. If you want to integrate your sum total expenses into your monthly budget, total up your estimated irregular expenses, divide by 12, slot that figure into your budget and earmark part of your monthly paycheck for that. You can temporarily keep the money reserved for those expenses in one of your savings account until it is time to pay for them.

  1. Prioritise the savings and debts categories.

Savings and debts are the most important categories in a budget. A survey commissioned by BlackRock reveals that Singaporeans save an average of 29% of their take-home paycheck. This is good news, since it is higher than the global average of 20%.

In addition to setting aside money in your savings account, it is important to stock up your emergency fund. Aim to save at least 10 percent of your paycheck for a rainy day. Unexpected sicknesses occur, as do car problems, house repairs, and even layoffs from work. Ideally, you should have at least six months’ worth of living expenses tucked away in a savings account.

For any of your loans, whether they’re for education, a home or a car, try to make more than the minimum monthly payment. Doing so can help you reduce your debts sooner and stop interest payments from getting out of hand.

Read: 10 Steps to Develop a Healthy Relationship with Money

  1. Cut back on big-ticket items.

Of course, stepping away from the daily cups of coffee can help you save a couple hundred dollars a year. However, in addition to curbing your unnecessary spending habits, remember to examine your major expenses like mortgage or rent, utilities, grocery bills and education fees.

Can you do anything more to save money on big-ticket items? Are you renting a spacious apartment in a high-end part of town? Maybe a smaller place, or a place in a more affordable part of town would do just as well. Are your utility bills high? Try limiting your use of air conditioning. Are you struggling under the load of school costs for your first child? Consider affordable options such as the Edusave Scheme from the Ministry of Education.

There are many other ways you can save money when living in Singapore. Doing a bit of research and making proactive choices can help you reduce your large fixed expenses to make room for more saving and even a few little indulgences.

  1. Leave space for a bit of cheating.

Set aside a small percentage of your budget for treats to motivate you to carry on. Prioritise your “wants” and allocate a budget for those you value the most. What makes you happiest – is it travelling, reading and helping other people? React accordingly and funnel your discretionary spending money into vacations, books and charity.

  1. Minimise your use of credit cards.

It is important to note that there are situations where using credit cards makes good sense. For example, you can use automatic electronic payment for some categories in your spending plan such as the mortgage, loan payments and other bills to avoid late payment fees. You may also prefer to use  your credit cards if you benefit from cash-back schemes or a reward points programme.

However, if you know you are having problems turning your back on tempting items at retail, try to minimise the use of your plastic cards. Paying with cash instead of credit or debit cards makes you think twice about every purchase you make. All you need to do is withdraw a fixed amount of cash from the ATM every week or month, and use that money – and that money only – to pay for daily necessities like food and transportation.

Read also: 6 Financial Planning Actions To Take Today

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).