In the last two posts I organised my thoughts about:
-
Annual deposits with 5–6% interest (safe parking place, but not magic)
-
What investing actually is, and how it’s different from just saving
Now comes the practical question:
“Every month, how much should I put into savings, how much into deposits, and how much into real investing?”
There is no perfect formula. Our income, responsibilities, and risk tolerance are all different.
So this post is not “you must follow this”.
It’s just the way I try to build my own money layers so I don’t panic later.
Step 1: Know my real monthly needs
Before talking about percentages, I need one basic number:
How much do I really need to survive one month?
I include:
- Rent / home cost
- Food (normal, not “treat myself every day” version)
- Utilities & internet
- Transport
- Basic health / phone / small obligations
This becomes my monthly basic expense number.
Example (just imaginary units—whether you think in RM 4,000, $1,000, or 10–15 million IDR, the proportions work the same):
- Monthly net income: 10,000
- Basic expense: 6,000
Leftover = 4,000 that I can use for:
- Savings
- Deposits
- Investing
- Plus maybe a small “fun” budget so I don’t feel like a robot
Without this number, any “percentage plan” is just theory.
Step 2: Build the three layers in order
I like to think in layers, not products:
- Layer 1 – Safety (Savings / Emergency Fund)
- Layer 2 – Parking (Time Deposits)
- Layer 3 – Growth (Investing)
And I build them in this order, not all at once.
Layer 1: Safety first
If I don’t have emergency money, I’m forced to sell things at the worst time.
So at the beginning, almost all my leftover money goes here:
- Target: at least 1–3 months of basic expenses
- Kept in: normal savings account / e-wallet (something easy to withdraw)
Using the example above:
- Basic expense: 6,000
- 1 month emergency = 6,000
- 3 months emergency = 18,000
While I’m building this, I don’t worry about “investing” yet. If you want to read more about why this buffer matters so much emotionally, I wrote about how a small emergency fund changed the way I live.
The goal is just: “Can I handle one small disaster without borrowing?”
Layer 2: Parking with deposits
After I have at least a basic emergency buffer, then I let some money “rest” in deposits:
- Time horizon: money I won’t touch for 6–12 months
- Purpose: slightly better return than savings, with low risk
- Product: time deposit / fixed deposit
If suddenly I need money:
- First I use Layer 1 (savings)
- I try not to break the deposit unless really needed. Keep in mind that early withdrawal usually means forfeiting accrued interest (or paying minor administrative penalties depending on your bank), which is why Layer 1 exists to protect this parking spot.
Layer 3: Growth through investing
Only when:
- I have some emergency savings, and
- I don’t feel nervous looking at my bank balance
then I allow a portion to go into growth assets (bonds, stock funds, etc.).
This is money I’m willing to leave for several years and accept price ups & downs.
Step 3: Simple percentage frameworks I use
I don’t like very complicated budgets. Instead, I use a few templates based on where I am in life. If you want to see how these ratios look with your own numbers, you can test them out in the Budget Category Visualizer.
1. Early Stage: The Safety-First Split (70 / 20 / 10)
Here I’m in “stabilize my life first” mode.
From my monthly leftover (after paying basic expenses), I might do:
- 70% → Savings (Layer 1)
- 20% → Deposits (Layer 2)
- 10% → Investing (Layer 3) (or even 0% if I’m super anxious)
Example: leftover 4,000
- 2,800 to savings
- 800 to deposit
- 400 to investing (or 0 if I’m not ready)
This looks “boring”, but that’s okay.
The priority is to feel safer each month.
2. Balanced Stage: Moving Toward Growth (40 / 30 / 30)
Once I reach, for example, 3 months of expenses saved, I can slowly push more into growth.
From the same leftover 4,000 I might move to:
- 40% → Savings (to keep growing the buffer, but slower)
- 30% → Deposits
- 30% → Investing
So:
- 1,600 to savings
- 1,200 to deposits
- 1,200 to investing
Here, my safety layer already exists, so I’m okay allowing more to go into “roller-coaster land”.
3. Comfortable Stage: Prioritizing Future Compounding (20 / 20 / 60)
If I reach a point where:
- Emergency fund is solid
- Deposits are already at a level I’m happy with
- I understand my investments better
Then I might shift again:
- 20% → Savings
- 20% → Deposits
- 60% → Investing
This is only if emotionally I can handle it.
If I know a big drop will make me unable to sleep, I should not copy this.
What if my income is irregular?
Not everyone gets a fixed monthly salary. Some months are big, some months are small.
In that case, I prefer to use rules based on cash that comes in, not fixed numbers.
Example rule:
- Every time I receive income:
- First, cover this month’s basic needs.
- From the leftover:
- 50% → Savings (until emergency fund target is reached)
- 25% → Deposits
- 25% → Investing
If one month is very good, the amounts are bigger.
If one month is bad, maybe there is nothing for investing – and that is okay.
The important thing is the habit and direction, not perfection.
Small “fun money” to avoid rebellion
One thing I learned: if I make my plan too strict, I end up rebelling against myself.
So even while trying to be disciplined, I like to keep a small:
“Guilt-free fun” percentage
Example:
- After paying basic expenses, I set 10% of leftover as “do whatever I want” money:
- Eating out
- Game top-up
- Little reward
For instance, out of 4,000 leftover, 400 becomes fun money, and the remaining 3,600 follows my savings / deposit / investing split. This way I don’t feel like money is only for bills and future stress.
How I review and adjust
Percentages are not tattoos. I can change them.
Every few months I ask:
-
Do I still feel safe?
- If not, increase the percentage for savings.
-
Is my deposit level enough for short–medium term plans?
- If I’m saving for something in 1–3 years (e.g., travel, small business), maybe increase deposits.
-
How do I feel about my investments?
- If price swings make me too emotional, I might reduce the investing portion and move back to deposits until I learn more.
Slow adjustments are better than big impulsive changes.
Not a perfect formula, just a clear direction
At the end of the day, my goal is not to find “the best percentage in the world”.
My goal is to have a clear direction:
- I know how much money is for today (expenses & little joys)
- I know how much money is for safety (savings & deposits)
- I know how much money is for future growth (investing)
And I accept that:
- In some seasons, safety needs to be the focus.
- In other seasons, growth can get more attention.
As long as I keep reviewing and adjusting honestly, I’m already doing better than my past self who had no map at all.
Mini Tool: 10-Minute Savings Check
If you want to gently apply this idea, take 10 minutes and go through this list. You can write it in a notebook, your notes app, or a simple spreadsheet.
- 1. Write your monthly net income.
Just one number is enough for now. - 2. List your fixed needs.
Rent, food, transport, basic bills. You don’t have to be super detailed, just a calm estimate. - 3. Write your current “safe” savings rate.
For example 5–10% of your income. You can test your exact percentage with the Simple Saving Rate Planner to find a number that feels realistic, not punitive. - 4. Choose one small upgrade.
- Increase your savings rate by 1–2%, or
- Keep the same rate but make it automatic (standing order or scheduled transfer).
- 5. Decide a review date.
Pick a date about three months from now and note: “Check how this savings plan feels.”
You don’t have to change everything at once. Just one small upgrade from today is already progress.
If this topic makes you anxious, you might like reading Money & Mind: How Small Financial Wins Calm My Anxiety as a gentle next step.
If you want to see how this percentage split fits into the bigger picture, you might also like:
- Annual Deposit 5–6%: Safe First Step or Not Enough?
- What Is Investing? A Simple Map Before I Touch Stocks
- Putting It All Together: My Simple Investing Map for the Next 10 Years
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