It’s fairly easy to make a budget. Plenty of mobile applications out there will help.

The hard part, though, is sticking to it. If you spend S$250 on restaurant meals rather than the S$150 you budgeted this month, for example, it’s clear that the budget doesn’t work. 

CONSTRUCTING A BUDGET

A budget is, very simply, a tool to help you figure out how you want to spend your money and make sure you are spending the way you want.

Constructing a budget is straightforward. You’ll start by adding up all your income and all your expenses during the month.

Tracking for a couple months can make sure you don’t forget anything.

Then, put your expenses in categories such as food, rent, restaurants, clothes and entertainment.

Don’t forget to add in money for your investments. 

Once you have added up and categorised all your income and expenses, those totals become your monthly budget.

If you have extra money, you can invest it.

If your income does not cover your costs and you are not living within your means, however, review the budget and figure out what to spend less on so that you can pay for everything.

Look especially at discretionary expenses and figure out where to cut back.    

Realise, too, that your budget is the first step toward creating a master plan for managing your money and achieving your goals.

It doesn’t mean that you need to deprive yourself of things you love — as long as you budget for what you want to do, whether it is watching that new movie or visiting that new restaurant. What the budget does do, though, is to help you resist the tiny expenses that add up and leave you with no extra money.

After the budget is set up, you will need to track all of your income and expenses.

You can use a budgeting app to make tracking easy, or even just paper and a pencil.

And since adding up the totals every day is tedious, keep track of your income and expenses daily — yet calculate the totals and compare them against your budget only once a month.

STICKING TO A BUDGET

The good news about budgets here, based on surveys by OCBC bank, is that 66 per cent of millennials and 69 per cent of all Singaporeans say that they stick to their budget. However, 40 per cent of all Singaporeans still worry about money and 58 per cent are not on track even just to accumulate enough money for an emergency

What that means is that many people have a hard time sticking to their budget and many are barely keeping up with their bills. To make sure you stick with your budget, five steps are essential.

1. Get used to using your budget to figure out how much you can really spend

Before you go to the supermarket or head to a restaurant or buy a new app, for instance, check to see whether you have enough money in your budget to pay for them.

2. Get into a routine of monitoring your progress regularly and using the results to improve what you are doing

Whether you use an app, software or paper, compare your real income and expenses with your budget at least once a month. If you simply look at reviewing your budget as part of a routine cycle, similar to checking your weight or filling the petrol tank in your car, it can be easier to use the results to stay on track. Using an app can make it simpler.

If your expenses are not staying within your budget, use the information to get back on track rather than getting discouraged.

3. Be realistic

Many experts may tell you to eat at home all the time, for example, or not go out with friends on weekend nights. Realistically, you are going to go out.

The key is to put those expenses into your budget.

If you know you usually spend S$50 or S$100 when you go to a restaurant, for instance, don’t pretend that you will scrimp by with S$25.

And if you find that you are not spending within your budget, change it to take account of the expenses rather than your aspirations.

4. Be accountable and motivate yourself

If you need some help sticking to your budget, consider finding a friend to be accountable to or posting your successes for everyone to see.

Knowing you have to tell someone whether you are on track in meeting your budget can be a major motivator for controlling your spending.

You may also post on social media when you hit a goal, such as spending below your budget for the month or saving your next S$1,000.

5. Celebrate success

While sticking to your budget is no easy task, staying on track can make you feel in control and be tremendously satisfying. Turn treats that are in your budget, such as buying a shirt or having an extra piece of cake, into celebrations.

Whereas a budget you dread is doomed to failure, a realistic budget and treats for success will help you meet your goals.

While budgeting isn’t always easy, developing a budget and sticking to it, or cutting back when you spend too much, can put you on the path towards a brighter financial future.