A properly prepared monthly budget helps you save money for your future.
I know you are not in the government or are not owning an MNC to prepare a budget. Trust me every person needs to be aware of his/her money by tracking each penny they spend. A budget helps you be mindful of your spending habits which help you save a lot of money.
Small spendings like in a tea shop or a Kirana shop doesn’t look threatening, but believe me, they are the ones that pose the biggest threat to your savings. When you are not aware of your spending, they eat away all of your salary or savings in an instant.
Suppose you are addicted to cigarettes. Let’s say you smoke 4 cigarettes a day, each costing 20rs. Doesn’t look like much of a spending, right? If you calculate for the whole month, it comes to 2500 or close. A minimal expense of a 20rs cigarette can eat away 2500 each month and you are not even aware of it. How dangerous can that seem? The smoking expense is not dangerous, but you not being aware of it is dangerous.
When you plan a budget, you know that 2500 of your salary will go into cigarettes, so you might minimize cigarette consumption or allot that amount to cigarettes and then lead your month accordingly. With cigarettes, you might have tea, biscuits, or mint, which according to you is just a minor expense. However, no expense is minor, every minor expense builds up a mountain when repeated.
So, ready to prepare a budget? Here are the steps to plan a monthly budget
1. Analyze your expenses
Figure out your expenses to see where you can save money!
Before figuring out the expenses, calculate your income. If you are into freelancing or have multiple sources of income, then you need to add up all the income. Now that you are aware of your earnings, calculate your expenses.
Group your expenses into different categories. You can also keep track of your expenses by using finance management apps.
Essential expenses- These are the expenses that you cannot curb.
- House rent
- Electricity bill
- Monthly ration or the food and groceries
- Transport expenses
- Any EMIs or loans to pay
Unexpected expenses- These are the expenses that can jump into your budget and ruin it.
- Hospital bills
- Vehicle repair
Extra expenses- These are extra expenses that are not necessary for you and so you can curb them.
- Regularly buying clothes
- Eating out
- Going to movies
- Buying gadgets that are not necessary
You need to allow a full amount to the essential and unexpected expenses as they are necessary. However, if there is no urgency in the month, then you will end up saving on unexpected expenses. The extra expenses are not necessary, but you can allot a fraction of your salary to them. However, do not allow a huge amount of the extra expenses
2. Set a saving goal
Having a goal gives you exact data on how much you need to save.
Try to figure out how much you can save monthly and then set saving goals. Try to set short-term goals and realistic goals, to not get disappointed. A goal always reminds you to save your money. Once your saving goal is set, analyze the monthly amount that you will need to save. See, which expenses are useless and can be curbed. You can also refer to more tips about saving money effectively.
3. Adjust your budget, if needed
Adjust your budget once in a while when your expenses increase or decrease!
Do not be demotivated when you are not able to save the same amount consistently. It may be that your expenses increased over time and you need to modify your budget. Also, with inflation, the prices of goods may increase, and so your expenses are bound to increase. Be realistic and change your budget accordingly. It is good to save, but do not be too harsh on yourself. Allocate money to enjoy sometimes.
4. Be consistent
Consistency is the key to bringing in positive changes!
I have laid down a few steps for a monthly budget, but what is the use if you do not apply them consistently? Do not be the guy who paid the gym fee, went for 4 days, and just procrastinated. Apply the above steps and be consistent in your pursuit. One way to feel motivated to plan a monthly budget is to set realistic goals, so you feel happy about achieving them and then repeating them.
I hope I was of help to you in managing your monthly expenses. Of Course, the above points are to manage your monthly budget, but only when you are consistent in your efforts. Get started with planning your budget and visit us again, when you are looking for insightful articles on such topics.
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