It’s not over to earn enough money, but it is also important to prepare a budget and stick to it. It is prudent to prepare a budget list and be committed to it always.
As expenses are increasing day-by-day, those who stick to the monthly budget plan scores big than easy-go spenders. While preparing monthly budget, one should follow-
- Make a habit of preparing a budget either on a paper or on budgeting apps- In olden days, it is common to prepare a budget on a notebook/sheet of paper noting each and every expense. But now, as the technology surges, there are plenty of budgeting apps on google play store which enables the saver to record each and every expense. Another advantage of using budgeting apps are they automatically allocate categories of your spending. For example- Daily need items are included in groceries/essentials category while medical bills are recorded in health expenses category etc.
- Don’t treat preparing budget is a tedious one– Some think that preparing a budget is a waste of time and tough one to implement! But this attitude has to be changed! With the arrival of budgeting apps, preparing budget has became an easy task. It is in your hands to stick to it!
- Scan your bank a/c statement of at least 6 months to have a clear idea on your expenses-As digital payments surge, customers are attracted by the cash backs and offers, they tend to purchase lavishly without counting their expenditure levels. In fact these cash backs and offers are meant to lure customers to purchase unwanted items unnecessarily. So to be financially free scan your bank a/c statement of at least 6 months to check where are you spending heavily on unnecessary items.
- Categorise your expenses among Needs and Wants-Before spending, think twice whether it is a need; which can’t be compromised on and on wants; which is a temporary desire and can be delayed for some more time to purchase. If you really knows the difference between “Need” and “Wants” your monthly budget would be set properly.
- Ensure that your expenses should be less than your income-With the easy availability of the loans and credit cards, people tend to purchase on EMI’s(Easy Monthly Installments). Though it seems to be easier to repay the credit card bill, in practical,your expenses won’t be in your control.Swiping credit cards frequently makes your monthly budget into deep trouble.
- Differentiate your short-term goals and long-term goals– First identify your short term goals(which are to be achieved within 1-3 years)and long term goals(Which are to be achieved within 5 years or more). After identifying the goals, prepare a budget to achieve your goals. Allocate short term goals to debt instruments; which are relatively safer and long term goals to equity schemes; which would reward you in the long-run. Prepare a plan yourself and stick to it; if you are not familiar in financial planning, consult a good financial advisor and allocate funds as per his advise.
- Don’t put your entire corpus in a single instrument– Some people are fond of gold, some are on real estate, some prefer equity, some prefer chits. There is a saying- “Don’t put all your eggs in one basket”. Whatever the instrument may be, financial planners suggest to “Diversify” Your assets into different asset classes. If one asset class under performs, the other will manage to perform better thereby allowing you to earn decent returns.
If you follow the above steps, you will be financially free and lead a secure life!