5 Steps To Create Your Budgeting System Today

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Back in 2018, I shared my so-called “Mat Kewangan’s Bucket Budgeting System” which helped me to better manage my money. Since then, a lot has changed which prompts me to revisit my budgeting system. 

In this post, I am sharing with you the exact steps that I take when planning my budgeting system.


First…Why Do You Need A Budget?

Imagine yourself driving to a new destination without Google Maps, Waze or any other map applications — not even the manual, paper map. Chances are, you won’t reach your destination without having to ask around and probably lost your ways once or twice.


Budgeting Lost

That’s what budgeting is. It is a map which provides direction for your money. With a budget, you are explicitly telling your money where to go, instead of you blindly spending and hoping for the best.

Do budgeting works? Yes! it works for me, but will it work for you? To be fair, I’ve run a short survey on Twitter asking around about budgeting and what people think of them.

Twitter Budget Qs


I received a lot of replies sharing their budgeting tips, strategies and favourite budgeting tools. If you are one of them, thank you for your replies!





It is great to know that most people have some sort of basic budgeting system going on. Most importantly, there are a number of replies which said budgeting helps to control their spending.


Budgeting Overspend 2

Overspend 3


Yep. There you go, budgeting works!


How To Start A Budget

Below are the five steps that you can take to start making your own budget. The basic premise of this budgeting system is to separate your income into 4 different categories, or “buckets”. They are: Blow, Splurge, Mojo and Grow.

Bucket Budgeting


1. Track Your Spending

I would say the first step of creating a budget is to actually track your spending. You cannot start a budget without understanding your spending habit, commitments and cash flow.

Tracking your spending allows you to be aware of your expenses. From my Twitter survey earlier, people are using one of these methods to record their expenses:

  1. Microsoft Excel.
  2. Mobile applications such as Wallet, Money Lover, Subscriptions, Sprouts, MyDompet
  3. Manual entry in their notebook.


It doesn’t matter which method you choose as long as they are convenient and accessible to you. My personal choice is the Wallet app because of the minimal interface and detailed data analysis features. Oh, it is free too.

Record your spending for a month and try to spend as you normally do. Don’t try to adjust your spending because we want an accurate result of your spending habit.


2. Blow Bucket — 60%

Once you have your monthly expenses, the next step is to identify your fixed and variable cost. Fixed cost is your monthly commitments such as rent, utilities, car loans, and insurance. Variable cost is your expenses which tends to fluctuate from month to months such as groceries, food and fuel.

Allocate a sufficient amount of money to both of these cost in a bucket called “Blow”. You will be using this money to pay for your fixed and variable cost hence, the name. Ideally, you want the amount to be within 60% of your net monthly income.

Your fixed cost will most likely account for a huge portion of this Blow bucket which means any savings that you made towards your fixed cost will get you far. So, be extra picky the next time you choose a place to rent, a car to buy and internet plans to subscribe.


3. Set Aside Your Splurge Money — 10%

Then, set about 5 to 10% of your net monthly income as your splurge money. This is your guilt-free, no questions asked money meant for your enjoyment and you can spend it on absolutely anything that you desire.

A fancy dinner out, a half an hour go-kart session or that new pair of jeans that you’ve been eyeing for a while. It’s your choice, just spend it within the limit.


I find that having a dedicated amount of money to just spend on whatever I want, makes me happy. You should definitely include happiness in your budgeting!


4. Mojo — 15%

As the name implies, Mojo is the money that helps to bring back your mojo in case of unwanted events. In short, they are your emergency funds.

Put around 15% of your net monthly income to this bucket. You should target to have around 3 to 6 months worth of your monthly expenses (Blow) in here. 


5. Grow — 15%

The remaining 15% of your money will be going into the Grow bucket and this is where the magic happens. This is the money that you will be investing in for your wealth and retirement.

Since they are for investment purposes, you don’t necessarily have to keep them in a bank account. Your Grow bucket can be any investment instrument of your choices such as unit trust, Robo-advisor platform, private retirement scheme (PRS) or property. My grow bucket of choice at the moment is Wahed Invest.

If you are just starting out, focus on boosting your emergency reserves (Mojo) than investing. Reduce some percentage here and increase the percentage going into Mojo. You can increase the percentage back as you have comfortable emergency savings.



Congratulations, you have a budget now! Creating a budget is easy, just like how easy it is to key in your destinations in Google Maps. But the actual driving, or adhering to your budget is the hard part. Just stick with it for a while and trust me, it gets easier.

Do note that the percentage above is my suggestions and they work for me. Our circumstances may be different and what works for me might not work for you. Feel free to experiment around until you get to one that is suitable to your lifestyle. 


ACTIONABLE TIPS: Start tracking your spending today. Then, divide your money into the 4 buckets: Blow, Splurge, Mojo and Grow. Good luck!

Did you find these tips useful? Share your thoughts in the comment section below. Also, do share this post within your Twitter and Facebook circle so they can start creating their budgeting system too!


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Mat is your average Malaysian with the dream of being financially free. Deep down, he knows the journey towards independence is very tough and treacherous, which is why he blogs in Mat Kewangan as a way to keep him motivated and keep the dream alive.
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1 month ago

Hi Mat Kewangan, currently I start planning my budget base on your standard template the 5 bucket. Hehe..totally I’m a broke family guys and now trying to adjusting the percentage there. My question is about the Blow bucket expenses category is a basic needs? Clothing is it include? Thanks

1 month ago

YNAB has this concept of zero-based budget . You should give it a try https://www.youtube.com/watch?v=H_idkKBTuPY

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