A Little Goes a Long Way: Smart Secrets to Family Budgeting
There’s nothing more we want than to be able to efficiently manage our money. After all, the money that we want to manage is oftentimes, hard earned. This is where a budget comes in. A budget executed properly, should help you see where your money is going, get more utility out of every buck, and save some extra for future use.
Secret 1 - Set A Goal
The first smart secret to a budget is to set a goal. What do you want to achieve? Do you want to correctly appropriate your income into bill payments? Do you want to put an amount aside for a big purchase or a huge investment? By having a goal, you will be able to shape your budget to best serve your interests.
Secret 2 - Note The Money Flow
Secondly, you would want to take note of where your money usually goes. This includes bills, major but regular purchases (like grocery costs, healthcare costs, and the like), and everyday miscellaneous purchases. Only when you list down where you know your money usually goes will you be able to identify which expenses you can do without? Once you’ve identified these regular expenditures, take into consideration what you can cut back on. How much do you spend on your daily caffeine fix in the morning? How much do you spend on newspaper deliveries to your front door? The measly Rs 50 or Rs 100 of these small purchases cumulatively translates to more than Rs 36,000 a year! Instead of buying your expensive latte or reading the newspaper in print, put aside the amount you would usually pay for these small, routine purchases in a small container. You will be surprised at how much you’re saving from your older budget.
Being indebted is a vicious cycle on its own. You’re talking about continuous payments, not to mention huge interest rates. The best way to deal with this is to pay the minimum on all of your debts in order to avoid paying extraneous late fees. Whatever cash excesses you may have, you can opt to add them to the payments you make on your biggest debt. This way, you are concentrated on getting the biggest debts first that cost you the highest interest rates. Doing this progressively, you’ll be amazed at how much you’ll get off your huge debts.
The last and most important step is to jot down the amount you earn and the amount you spend. You can make use of computer cash management programs, or make database sheets of your own. Make a system that works for you and will help you keep track of your monthly budgeting progress.
Guide To Better Budgeting
A budget is basically a money plan, outlining your financial goals. With a budget, you can establish and regulate funds, set and achieve your financial objectives, and make advance decisions as to how you want your finances to function well for you.
The main idea in budgeting is to put aside a certain amount of money for both expected and unexpected costs.
Simply put, budgeting means an estimation of monthly home expenses based on previous expenses and bills.
The initial step in budgeting is to find out how long your compensation will last. Define fixed expenses like car payments, home rentals, insurance, etc. Likewise, follow up on your expenditures thoroughly for a month so you can discover and understand where your funds are going. Through the proper determination of your “spending patterns”, you can immediately identify solutions for effective budgeting.
For instance, when you have a steady monthly income of Rs. 1,00,000, you should subtract all your identified monthly bills from that income.
Other bills can be assessed and then subtracted from the amount of your income. The balance that remained after fixed costs can now be your budget in the household. Rather than allocating money for miscellaneous things like gas, clothing, entertainment, and groceries, financial planning will allow you to use proportions or percentages of them.
The strategic solution in order for budgeting to be successful is inflexibility as well as flexibility; there are fixed expenses, so payment must be an inflexible factor.
Budgeting will work best when very scarce omissions are made within greater limits. The idea here is to formulate goals and plans, and then abide by them as much as you possibly can.
Here are some tips on how to budget:
1. Have a good sense of money management. Your attitude is essential. Reach an agreement and compromise, and know the significance of reducing expenditures; it all involves a lot of sacrifice.
2. Plan your situation. Make a list with your earnings on one side and your overheads on the other.
3. Know the difference between luxuries and necessities. List down what you believe are luxuries, and with it, split the list in half, crossing out half the list.
4. Practice frugality, but with dignity. You can have fun with little or no spending at all. Rather than going shopping, play with the kids at the beach or at the park.
Budgeting is an effective and fundamental tool that is readily available to everyone. Consider it, and benefit from it.
Keep Them Handy: Budgeting Tools That Work
Budgeting your monthly expenses in order to get the greatest return on your income (and perhaps, even put aside some for saving!) doesn’t have to be extremely hard.
Various budgeting programs are available. Money management programs provide you with a package that allows you to enter your cash inflows and outflows, categorize your expenditures, and, at times, present an analysis of your spending behavior. Through these programs, you can also input the various payments you have to make monthly, and subsequently track if you’ve paid your dues on time. Moreover, some programs also offer you a tax form that will help you make sure you’re not missing out on any dues or any deductibles, for that matter.
Another budgeting tool that you can utilize is coupons. Various stores and magazines contain coupons that you can use to get discounts on various products. Should there be a need to purchase a particular product for which you have a coupon, you will end up saving a fraction of what you might have had to spend on a regular purchase.
Lists—whether on a piece of paper, on your cellular phone, or on your personal digital assistant (PDA)—will help you keep focused on what you have to buy, and, in effect, keep track of the purchases you make. A classic example is your regular grocery trip. Prior to making the trip, plan out the week’s entire menu and identify what food items and materials you need to purchase that are unavailable in your pantry. Then, make a list of other household items that you’ve run out of (or are eventually going to run out of before you can make the next trip to the grocery store). Armed with these lists, you can go to the grocery store and know exactly where to go and what you’re going to buy. Without these lists, you will walk idly along aisles, and likely pick up various food items that you won’t need in the immediate future, or already have at home.
A filing system is perhaps one of the best budgeting tools you can have in your home. With simple, labeled file folders, you can put together your bills, your receipts, and whatever bank documents are issued to you when you save or pay. By putting together your bills, your credit card receipts, and the like, you are able to keep track of how much you owe and when your payments are due.
Effective budgeting tools are those that best address your needs as a consumer. Create your own budgeting tool or find a program to do it for you—just make sure it suits your lifestyle.
BIJITH NELSON
