Managing money is not simply about how much you earn. How you divide and spend your income each month also plays an important role in your financial situation.
For some people, their salary may seem sufficient at the beginning of the month, but their bank balance becomes much smaller before payday arrives. Often, the problem is not only the amount of income but the lack of a clear spending plan.
The good news is that creating a monthly budget does not have to be complicated. You can start with a few simple steps and adjust your budget as your financial situation changes.
How to Create a Monthly Budget
1. Know Your Actual Monthly Income
The first step in creating a monthly budget is knowing exactly how much money you receive each month.
If you are employed, use your take-home salary after deductions such as EPF, SOCSO and PCB. If you have additional income, record it separately so you have a clearer picture of your total monthly income.
Income Source Amount Take-home salary RM2,500 Side income RM300 Total RM2,800 2. List Your Fixed Expenses
Next, list the expenses you need to pay every month. These are usually easier to plan because their amounts tend to remain relatively consistent.
- Rent or housing payments
- Car instalments
- Phone bills
- Internet
- Loans
- Insurance or takaful
- Childcare expenses
- Utility bills
3. Don’t Forget Daily Expenses
Daily spending is one of the areas that can easily cause a monthly budget to go off track.
Common examples include:
- Breakfast
- Coffee
- Lunch
- Food delivery
- Parking
- Tolls
- Snacks
- Online shopping
These expenses may appear small individually, but they can become significant when added together throughout the month.
For example, spending RM10 a day would equal:
RM10 × 30 days = RM300 per month
4. Divide Your Money Into Categories
Once you understand your income and expenses, divide your money into several categories.
Needs
These include housing, food, transportation and essential bills.
Financial Commitments
These may include loans and other fixed monthly payments.
Savings
Set aside money for your financial goals whenever your budget allows.
Wants
Entertainment, restaurants, shopping and other non-essential spending can be placed in this category.
5. Set a Daily Spending Limit
Another simple way to control spending is to set a daily spending allowance.
For example, if you allocate RM600 per month for certain daily expenses:
RM600 ÷ 30 days = RM20 per day
This does not mean you have to spend exactly RM20 every day. Instead, it gives you a reference point to help control your spending.
6. Review Your Budget Every Week
You do not have to wait until the end of the month to find out whether your budget worked.
Spend a few minutes each week checking:
- How much have I spent?
- Which category used the most money?
- Did I make any unexpected purchases?
- Am I still within my budget?
7. Don’t Try to Create a Perfect Budget
A budget does not mean that you have to stop enjoying your life.
The purpose of budgeting is to help you make more conscious decisions about your money.
If you overspend in one category this month, look at what happened and make an adjustment for the following month.
Conclusion
Creating a monthly budget does not require an expensive app or complicated formulas.
You simply need to understand:
- How much you earn.
- How much your fixed commitments cost.
- How much you spend on daily necessities.
- How much you want to save.
- How much you can comfortably spend on non-essential items.
Once you know where your money is going, it becomes easier to make informed financial decisions.
Start by tracking every expense for 30 days. Then use that information to create a more realistic budget for the following month.
Frequently Asked Questions
How do I start a monthly budget?
Start by calculating your take-home income and listing your fixed and variable expenses. Then set spending limits for different categories.
How much should I spend each month?
There is no universal amount that works for everyone. Your spending should reflect your income, financial commitments and personal goals.
Should I track small purchases?
Yes. Small purchases can add up over time, so tracking them can help you identify spending habits that may be affecting your monthly budget.
How to Create a Monthly Budget Even When Your Salary Is Not High
