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  • Writer's pictureAtiqah Nadiah Zailani

How to spend your paycheque

Putting that moolah on your pay slip to the best use.

Paycheque, calculator, piggy bank, debit cards

My first ever official paycheque was for USD 400 – a result of spending 12 hours a week cleaning old vinyl records at the back of the Music Library.

Because I was 18 and beyond dumb, I blew all of it on a ticket to New York City, and came back to San Francisco broke as ever, forced to starve until the next scholarship installment or the next paycheque came, whichever was earlier.

It took me close to two years to figure out a system to not throw all my hard-earned money down the toilet …

heart vs brain money

Whether you’re about to receive your first ever paycheque (which hopefully is a lot more than the USD400 of mine) or your ten thousandth paycheque, everything from here on will still apply to you.

What system?

By system, I basically mean a series of guidelines and steps to take on a consistent basis each time a paycheque comes your way.

The aim is for this to eventually become a habit, such that the system works even without you having to really think about it. You know, like brushing your teeth.

The system can be set up in 4 steps.

Step 1: Decide on your priorities

Instead of letting life and sudden temptations dictate how you use your paycheque, you should beat them to the chase and decide for yourself first.

On any given day, there are a number of things we all need to pay for: bills, food, clothes, games, watching movies at the cinema, etc. Some things you cannot avoid spending money on (like rent), while some things you actually enjoy spending money on (like books) (don’t judge). Some things you always remember to pay (like the internet bill because you cannot go on with life if the service is withheld), and some things you never think about even though they are actually important (like insurance and investments).

Out of this universe of things that require your money, take the time to figure out which of them deserves a permanent spot on your beneficiary list.

Do you want to dedicate a portion of your money to eating out because you’re a social butterfly and a foodie? Or do you prefer to dedicate a bigger portion to expanding your figurine collection? Whatever rocks your boat.

My list of priorities looks something like this:


Yours will differ from the above, naturally – you may have a category dedicated to Fitness (to pay for gym memberships or gym equipment or a personal trainer), or to Entertainment (for the Netflix subscription or weekly date nights or bowling outings).

At the minimum, I recommend at least 4 categories:

1. Living Costs

2. Investments (for the long-term)

3. Savings (for the short-term)

4. Miscellaneous

Step 2: Decide on your percentage

Once you have your list from Step One, the next step is to assign each category a portion of your paycheque. Again, percentages will differ based on your actual earnings, your lifestyle and the amount of money it takes to maintain that quality of life.

Using myself as an example again, below is how I’ve portioned out my paycheque:

percentage allocation

Living costs: My living costs typically take up 20% of my earnings. This is the amount of money I need to pay all my bills, keep a roof over my head and eat out with friends every now and then. Some of you will have a percentage much higher than that, or much lower than that – it doesn’t matter, as long as you yourself are comfortable with the number. If you think 15% or 30% is a decent portion to be spending on survival, then good for you. (However, I would worry if the percentage is way above 50% or anywhere close to 100%, which means you’re spending every cent that comes your way. You may want to rethink either your job or your lifestyle)

Investments: A third of my paycheque is dedicated to investments, because I take it very seriously. And so should you. You don’t need to put as high a percentage as I do, but a portion of your money should definitely go towards long-term investment vehicles (read my quick intro on Investments; I’ll write more about it later too). If you can afford to, you can also put a higher percentage than mine.

Savings: Because I knew I planned on getting myself a house and a car at some point in the near future, I dedicated a whole category and 10% of my paycheque for them. I know a lot of people simply take on a loan for this purpose, but I highly encourage you to put in the effort to save for them in advance. Even if you can’t possibly save enough in time, you will at least be able to reduce the amount you need to borrow. The less debt the better (more on this later in the series too!).

Travel: This is the next biggest category, after Investments & Living Costs, because I also take travel very, very seriously. We all have that one thing we obsess over and are more than happy to throw our money at (be it branded sneakers or photography equipment or the latest Apple gadgets), and mine just happens to be travel. You can replace this category with whatever makes the sun shine brighter in your world.

Charity: As a reminder that my money isn’t wholly mine and is, in fact, a gift from God, I have a category dedicated to giving 10% of my paycheque away. You don’t need to agree with that philosophy and to have this as a category in your own list, but I highly recommend it. It makes you less possessive about your money and goes a long way in reminding you that money is only ever a tool, and not the goal.

Blow: Honestly, my favourite category – I put 5% of my paycheque here and use it shamelessly on whatever I want, even if it’s as stupid as buying a mug decorated with angry, fat Sumo fighters, or as indulgent as a spa and massage session. This is not a necessary category to have, but it’s so fun!

Step 3: Design your system

Now that you have your categories and percentages all set up, it’s time to put them to use. (Remember, these categories and percentages are not fixed in stone and can be adjusted at any time. I myself have gone through several versions before I finally settled on my current one).

Every time a paycheque, or any other form of income, comes your way, you need to divide it into your pre-decided allocation. So if I hypothetically earned $1000 this month, then this is how I would divide it up:


I would allocate the corresponding amounts to each of my categories, and repeat this with every paycheque.

When I am about to spend on something, money has to come out of the corresponding category. So if I bought groceries, that will come out of my living costs category. If I bought a train ticket to Hogwarts, that amount will be withdrawn from my travel category.

Moving money

If I run out of money in my travel category, I stop spending on travel until I accumulate more money. But if I ran out of money in my living costs category, I can't stop spending on it because I have to live. I then 'transfer' money from another category, which means I sacrifice another category for the time being.

Moving money 2

It's up to you if you will allow such 'transfers' or if you will strictly stick to your percentages. If you find that you are constantly running out in a particular category, you may need to a) rethink your percentages, or b) earn more money, or c) spend less money, at least in that category.

Step 4: Follow through

From here on, it’s just a matter of following through with the system you’ve set up. It will take some getting used to, but eventually, you will spend less than 10 minutes each month to allocate your paycheque and put your finances in order.

You can rest easy knowing that every single cent you earn is going to all the right places (determined by you) and that all of your priorities are being financially taken care of.

The system in a nutshell:

Prioritize pizza

#1 Priority: Pizza


Ok, all these numbers and percentages and categories sound easy enough in theory, and how do you actually do it in real life?

Next... we'll go through the Envelope System you can use to put the percentages above into actual practice.


  1. Decide on your life priorities and categorise them accordingly. If at a loss, you can refer to my recommended 4 basic categories above.

  2. Assign the percentage of your paycheque that will go to each of those categories.

  3. When you get your next paycheque, allocate according to the percentages, and continue with future paycheques.

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