Simple Budgeting : How to Control your Spending And Increase Savings.

Introduction

Many individuals can attest to the fact that money management can sometimes be overwhelming especially when there are numerous bills, expenses, and targets to meet.  This blog will simplify some of the efficient ways to budget, save, and spend your cash, in order to earn more every month’s pay and improve your outlook towards the future financial status.

History and Evolution

The art of budgeting dates back thousands of years, with the first comprehensive national budget being enacted by Sir Robert Walpole, the British Prime Minister, in 1733, wherein he introduced what has often been considered the first formal government budget in Britain.While long before this formal presentation a kind of budgetary exercise had been undertaken, namely by ancient Egypt, Greece, and Rome, where the rulers or the stewards of the state would gather and distribute the wealth of the state for posting into the treasury.However, Walpole's system and subsequent adherence to the imposition of laws and regular procedures regarding national budgets on income and expenditure would establish it as a practice worth calling modern.

Making a Simple Budget

Using a budget you can for see your expenses in the future and you can plan and adjust according to that. And you can make sure that you are not spending more than you earn.

How to Make your Budget?

• List all your Income source, ( Your Salary, Income from any other source)
• List all your recurring expenses ( Rent, Groceries, School fees)
• Include expense that are not recurring but may arise during the month ( Family outing, food entertainment)

50/30/20 Rule

• 50% of your salary must be used for needs like rent, utilities and groceries
• 30% should be used for entertainment and outing
• 20% should be used for paying debts or as savings

Apps like : Money Manager, Walnut etc can be used.

Savings Automatically

• Automation : You can set up automatic transfers that will help you to transfer certain amount form your account to a savings. Which you don’t need to do it manually it will happen by its own.
• Emergency fund : You must have a saving that can make you needs for at least 3 months , in case you are having a medical emergency or a Job change
• Saving for Goals : If you have a goal of going for a vacation or buying something which is expensive you can set separate goals and save separately.

Reducing Unnecessary Expenses

You can keep a spread sheet or app to track you daily expenses and make a check on it and reduce unnecessary expenses, For example if your making tea or coffee expenses daily and subscribing to too many platforms which you may not use regularly. Also you can save buy cooking at home instead of ordering online. Small things but can help in making big changes.

Apps like Moneyfy, Expense tracker etc can be also used.

Planing For Big Purchases

• Always try to plan early for big purchase unless it is an emergency, if you are planing to buy a phone or planing for a vacation start saving early instead of using credits.
• Set up a time line when you are planing for purchase and save monthly according to that.
• ET money is an app help you to track investments and Big financial goals.

Handling Debts Smartly

• Hight Interest debt first: Always pay the debts with high interest rate first because interest is an additional expense, If you have a credit card try to never miss the due dates and pay correctly.
• Avoid new loans : Always try to avoid new loans, we will fall in to debt easily but to recover from it is difficult.

Starting Small Investments

You can start small investments monthly in small amounts in banks or any other options. Certain Banks allow to start recurring deposits which you can start from ₹1000 per month which will not be a big amount and you don’t need to transfer manually.Or you can invest in Systematic Investment Plans (SIPs) which help you to invest amounts monthly which starting form ₹100 monthly. Apps like Phone pay, Paytm etc allows SIP options.

And after you have completed your Emergency funds you can start investing in long term fund such as Fixed Deposits, Mutual funds etc.

Building Long term Habits

• Always remember to review your budget as your expense will increase gradually so revisit your budget periodically and make necessary changes.
• Savings become easier when you have clear knowledge about your income and expenses, plan for you needs in advance.
• Start early for retirement - Plan for your retirement early even small savings to Employee’s Provident Fund (EPF), National Pension System (NPS) will be help full.

Challenges and Limitation.

• Unexpected expenses - Such as hospital emergency or any others
• Price changes - Inflation will also result in mistakes in budget
• Investing Time - We need to invest our time to complete our budget.
• Over Estimating Income - Income may not arrive as expected
• Tracking expenses - Difficult in tracking expenses
• Unrealistic Goals - Setting goals which cannot be met in current situation.

Conclusion

Managing your Monthly Finance and tracking expenses is not a big deal, by automating investments and simple budgeting can lead to a good savings for the future. The main key is to keep focus and be consistent, we can easily get away from our plans so be focused. By following a correct budget you can reduce expenses and debts.