Are you always short of money by the middle of the month? Don’t fret. We give you expert tips and tricks on making a smart household budget for your family
By C S Sudheer
It is a typical scenario: you and your spouse work very hard to give your children a great life. Every month you save diligently to take a much-deserved vacation with your family and for the future education of your kids. Unfortunately, though you earn well, there never seems to be any savings to give your family a decent life.
Does this sound familiar to you? If it does, then it is time to take stock of the situation and do something to reverse the scenario. Make that all-important household budget and free yourself from the circle of debts.
You might hate the word budget, believing it restricts spending and forces you to live a frugal life. The truth is, a budget helps separate the needs from wants. A budget helps you spend on the right things and to save before you spend. (Income – Savings = Expenses).
Smart budgeting teaches you the 50/30/20 rule of saving. You divide your salary into three categories of expenses. About 50 per cent of your salary must be set aside for essential expenses like food, rent and clothing, 30 per cent for lifestyle expenses and the rest for repaying loan EMIs. A smart budget can help you save at least 10 per cent of your monthly salary, perhaps more.
What are the benefits of doing budgeting monthly? A budget helps you live within your income. You can identify unnecessary and extravagant expenses which can help you save your money. A budget helps attain financial goals by organising spending and saving. It allows you to save for emergencies and can give warning signs on a potential financial crisis.
Write down all income and expenses
Manage all loan EMIs well
Account for children’s expenses
Budget for a financial emergency
Make a flexible budget
Make a flexible budget where you transfer excess money from one category to another category. There’s an exception to this rule. Never transfer excess money from emergency fund to any other category.
It’s time to conclude but do remember this. Be truthful to yourself when you make a budget and don’t make one that is too ambitious or sets unrealistic targets. Be Wise, Get Rich.
The author is CEO and Founder, IndianMoney.com
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