Budget Planning Becomes Stress Free

ToFinancial goals of the family: It takes two to tango

We have hit the half year mark and this is a good time to stop for a moment and reflect on your spending habits. Is your budgeting still on track? What we often end up doing is we track our budget from the start of the month, but as the days pass, we tend to take it lightly and stop tracking it. Spending less than we make is often cited as the most important personal finance goal. It helps us get out of debt, save for emergencies and stash money away for retirement. With those who tend to over-spend in mind, here are a few key points:
Understand The Goal – The goal of a budget is to help us control our overspending, so we can spend less than we make and focus on our spending on what matters to us the most.
Understand The Variable and Invariable Monthly Expenses – Understand that each month, there is a certain fixed amount that you spend and an amount that varies. The fixed amount in your budget could include home rent, maintenance and monthly, EMIs. Remember to not default on paying your EMI as this could mess up your budget plans the following month. Also note down your monthly variable expenses like groceries, vegetables, doctor visits, electricity and phone bills etc. Allocate the amounts to each of these needs and try to curtail expenses if they exceed the budget you have set.
Track Spending For A Week – This will show you how spending even small amounts of money adds up over time. It will also reveal areas of spending that otherwise go unnoticed. Ideally, we all should track the spending for a full month, but even tracking for a week can provide valuable information about your spending patterns.
Save For A Rainy Day – Once you know the exact amount of money you need to spend each month, set aside a portion of emergencies. This money can be extremely useful in times of need, so do not compromise on creating an emergency fund in your personal budget each month.
Try the 50/20/30 Plan – With this plan, 50% of your income gets to necessities, 20% to long term savings, and 30% to lifestyle choices. This can be a good start point if you struggle to decide just how much you should spend on individual budget categories.
Save First – Rather than saving what is left over at the end of the month, save first and then spend the rest. This strategy takes the advantage of behavioral finance. By getting money out of your check account and into savings first, you are less likely to spend your savings during the month.

Post Your Comment