Here’s Why You’re Broke Every Month… And How to Change That

Jeff Cuellar



Does this story sound familiar? Every month you receive your paycheck (or what’s left of it after CPF tears a chunk out of it), only to see your good intentions of “saving” most of it disappear in a wave of credit card bills, utility bills, loan repayments, daily expenses, and bad purchases.

If it does, I have good news – you can spare yourself the desperation of scraping by month-to-month without savings, courtesy of MoneySmart reader and CPA, “Vincent”.


Making the Change

Before you make the change, you need to accept what you can and can’t do about your financial situation. You know that if your boss is as tight-fisted on spending as a third-world dictator is about free speech, then you’re stuck with your current salary unless there’s a “regime” change or you “emigrate” to a better company.

You’ve also go to factor in CPF’s take from your salary and any other necessary expenses such as unsecured debt repayments (loans, credit cards, etc.), utilities (phone bill, etc.) and your daily food/travel expenditures. Once you have these factored, you can come up with your true “bottom line” – what you really have available to spend or save.

To make the change, Vincent offers one important piece of advice:

“The financial trouble starts when you don’t know exactly what your bottom line is… but once you do, it’s important to  master your bottom line, instead of letting it master you.”

Once you’re ready to make the change from ransacking your home for loose change every month to building your savings, follow these 3 money-saving rules:

  • Pay Yourself First
  • Categorize Your Spending
  • Forecast Your Spending


1. Pay Yourself First

When it comes to building your savings, Vincent advises you to take Warren Buffet’s famous “save first” quote to heart: “Do not save what is left after spending, but spend what is left after saving.” This piece of advice, paying yourself first, is so simple – but it’s enough to save you from financial disaster.

So what’s the best approach to paying yourself first?

“First, you should open another bank account. Once you’ve “paid” yourself by setting aside a certain amount in your primary account for savings/investments, channel whatever you have left to your secondary account as your shopping budget.”

“That way, you’ll have peace of mind knowing that you saved part of your monthly salary, instead of spending indiscriminately,” advises Vincent.


2. Categorize Your Spending

While “paying yourself first” is the first commandment of savings, categorizing how you spend your money is just as important. Just think of your paycheck as one big bag of rice that you’re scooping into different buckets. If you ate too much of it without saving some for an emergency – you’ll be starving when famine hits!

So how do you categorize your spending?

Vincent recommends that you divide your funds into the following categories:

  • Savings: Having a pool of emergency funds to tide you over once financial disaster strikes.
  • Investments: Setting aside that portion of “rice” that you’ll grow and harvest in the future.
  • Protection: Buying insurance so that you’re protected from financial risk when accidents/emergencies happen.
  • Expenses: Calculate how much you need to survive on a day to day basis (transportation/food).
  • Retirement: Setting up a Supplementary Retirement Scheme (SRS) or savings account because face it, your CPF is mostly going towards servicing your mortgage.
  • Fun Fund: Setting aside a little bit of money for your monthly retail therapy treatments that keep you out of IMH.


3. Forecast Your Spending

“If financial analysts can make spending projections based on historical financial figures, you can too,” says Vincent. It’s really not as hard as you think – all you need to do is draft a budget, compare your actual spending over the last year against the budget numbers, and analyze the variances.

“Once you do that, you’ll know exactly what the problem with your spending is,” advises Vincent. Maybe the problem is that you’re spending too much at bars every weekend like a U.S. sailor on shore leave, or perhaps you’re in a cycle where you pay your credit cards every month only to run up the balance again?

“Once you find the root(s) of your financial problem, it’s easier to take action. But even when you find the problem, it’s good to keep on evaluating your monthly spending so you don’t fall back into bad spending habits” says Vincent.


Have these or other financial rules helped you build your savings? Share your experience with us on Facebook!

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.