When you pay yourself first, how do you allocate those money?

In one of my posts, i had shared a chart regarding allocation rate for your monthly budget or income.

As shown in the pie chart above, i only suggested to allocate 20% of your monthly budget or income into Active Savings Account and the rest is committed into investments category.

Now i will highly suggest you pay yourself from the amount allocated in the Active Savings Account as the rest of the pie chart is for wealth building and will not be touching much unless you are a very active trader.

Now we will allocate again for the Active Savings Account per month into a few general categories.

• Bills

• Transport

• Giving Allowance

• Your own usage (food, entertainment, social gatherings)

• Savings

The above may or may not fit into everyone's budget plan but this will be a rough guide using a more generic terms to explain.

Bills

Utility bills, phone bills, home wifi bills, etc. Generally, the amount you pay for these bills are fixed or with small variations so it will be easy to tabulate how much to set aside to pay for your bills.

Transport

The amount set for transport may change more as depending how much you need to travel in that month and also accounting taxis you need to take.

For me, i use public transport often for work and outside work purposes, i will set aside $100 to top up my Ezlink card and additional $100 in case i need to take taxi or hire private cars. Again transport is another category where you can set fixed amount aside for.

Giving Allowance

This one is abit tricky, every person at some point of their life, will require them to provide allowance to their parents, children, or loved ones. The amount set aside for that varies with people depending on situation but i always makes sure me myself can still afford to eat, drink, pay bills and transport and have social life so please think through and give accordingly.

Your Own Usage

Fill your stomach, hydrate yourself, sign up for hobby class or courses, go on dates, entertainments, etc. This amount is for you to spend on yourself so you can still function as normal human being everyday.

Savings

You must wonder, since it is active account, saving in this account is not relevant since you had already allocated your other sum of money in other saving accounts or investments.

The answer is Yes, you still need to leave a sum of of money every month to save in your Active Savings Account so in various situations, you still have money to tap on in this account. Your fixed savings account and your investments assets are for really emergency cases or you need to make important and big purchases such as property or more investments.