One of the most common questions I get is how do I manage my monthly salary? How much do I allocate and budget my salary into the different buckets – savings, investments and expenses?
These questions have increased ever since the onset of the Covid-19 Pandemic. My guess is that some feel that the situation demands them to be more proactive about managing their finances.
So, I decided to write this post to breakdown the entire journey that salary goes through each month, and how I allocate them into the different buckets – savings, expenses and investments.
I hope that this walkthrough would give you a starting point on how you can come up with a system and plan to manage your monthly income.
I felt that this will be useful as a reference for some who have started out in their careers. Or, perhaps have been working for a few years but have not set up a system to manage their finances.
Table of Contents
The Concept of a Wealth Machine

Before I dive into how I manage my monthly income, I thought it would be good to explain first, my perspective of personal finance. Basically, how I think about personal finance is somewhat influenced by Kyith Ng from Investment moats. In one of his blog posts, he coined the term wealth machine.
How does this wealth machine work?
The first component is basically your income. Every month your income flows in. This can be from two sources – Your day job or your side hustle.
This money enters your bank account. Part of it is saved as your savings. For the rest, you can invest it to generate more income for you through dividends or investment gains.
Anything else is flown out as your expenses and lost – and becomes someone else income
Protecting this entire machine – is your insurance. In my view, If all else fails, you will need to count on your insurance to be there. Insurance is a whole other topic altogether so, if you would like to know more, do refer to my previous post on the types of insurance policies you should get in Singapore.
How do I prioritize as a young adult?
Looking at the components – Income, Savings, and Investments. I feel that many young people tend to prioritize investments and savings as the most important thing. I do not 100 percent agree with that.
In my view, this is how I would prioritize as a young person
Priority 1: Growing my income is the most important to me. Your 20s and 30s is your best time! After all, if you do not have capital, how can you invest? It takes money to make money.
Beyond developing hard skills, I also focus on learning how to present myself online and offline better such as picking up networking skills, designing a resume that helps me stand out, optimizing my use of LinkedIn, and even building a website for personal branding.
Priority 2: Increasing my savings. Savings are really important. However, there is a limit to how much you can cut without compromising your lifestyle too much – What Rui Ming from The Woke Salaryman said last week in his webinar was really true – collecting coupons and getting the best cashback is not going to make you rich.
Priority 3: Growing my savings by investing. I am not saying investments are not important at all. They are and I really feel that it is a necessity in this entire wealth machine. Any time your savings don’t grow at the same rate as inflation, you are effectively lose money. However, I feel that one should set aside emergency funds first. This gives you holding power.If you have enough holding power, you can ride out any crisis. You will not panic too much during temporary setbacks and make irrational investing decision.
If you’d like to learn how to analyze companies and identify the right ones to invest in, there is a free online webinar which you can watch here.
What happens to my pay cheque each month?

Now, I am going to take you through the journey of what exactly happen to my pay cheque each month.
Do note that when I plan my monthly budget, I focus on my base only and exclude variable income such as commissions or bonuses. If I do get them, I decide what to do with them on a case-by-case basis.
Every month before my salary is deposited into my account, 25% is being deducted. A total of 20 percent goes to CPF and another 5% goes to buying my company stocks.
Savings:
A total of 75% enters my savings account. From there, I keep 23% of my salary in a high yield savings account.
Expenses:
From there, I pay myself an allowance by transferring my income to a separate account in another bank. From there, some of my regular expenses are automated such as contributions to parents, charity donations, spotify, phone bill etc.
What I’ve just described is a method called the Pay Your First Method. Like what I’ve shown you, before you pay your bills, before you pay your parents before you do anything else, set aside a portion of your income to save.
- Firstly, this guarantees that you will save part of your paycheck. You aren’t going out and spending on whatever you want and then saving this rest. Instead, you are saving from the start and then spending what is left if you choose. you are prioritizing saving overspending.
- In my case, I am only allowed to spend what is in the expenses account. To enforce discipline, even more, I keep my atm card & credit card for my savings account locked up at home, so I don’t draw money from it.
- I also love this method but it doesn’t require you to categorize every expense or keep a detailed record of your spending.
There are many ways to reduce your expenses.
If you’re interested to find out about how you can save more, one of the things you can do when online shopping is to use Shopback which gives you cashback for online purchases on websites like Expedia, Zalora, ASOS, iHerb, Amazon, Nike, Underarmour and many more.
You can use my link here to get $5 when you sign up and make your first purchase.

The final part goes into investments
Whatever I earn from investments, either I save it as cash or reinvest it to try to earn more. I mainly invest in technology stocks from US and China (Since I work in this industry); some dividend stocks and also in Indexes.
If you are an absolute beginner in investing, then you can also get started with one of our top roboadvisors here, Stashaway. You can use my referral link here and get $10,000 off your first 6 months of investing.
Otherwise, if you’d like to learn how to analyze companies and identify the right ones to invest in, there is a free online webinar which you can watch here.

I encourage you to create a chart like this for yourself. This would give an overall strategy for you on how to manage your monthly income. If you want to create something like this, I included a link to my previous article on a Free Personal Finance Template for Singaporeans.
Again, I want to emphasize that everyone is different and you don’t have to live the same way as me. I can sleep with no aircon which has helped me keep my utilities bill below $50 per month but it might be really uncomfortable for others.
Others may have a bigger risk appetite and want to put more into investments.
So, you can use this as a framework and starting point but just design something that actually works for you and your lifestyle.