Like diet is to health, personal budget is to wealth
Time and again we have been proved that planning ahead always makes life easier. However, we are reluctant (read lazy) to do it and pretty much always finds ourselves in deep trouble. Be it financial planning or city planning, a budget is the first step to be taken. Without a budget, there can never be a sense of accountability to the inflow and outflow of cash.
Like most things we know is good for us and yet we avoid (like exercise), financial planning done right can prove to be a worthy asset if you convert it into a habit. It is not uncommon for us to wonder where the last Rs 4500 you withdrew from the ATM just got spent. The plus side of having a personal budget is that, you get to prioritise between your needs and wants. Paying rent, buying groceries (nutella included), transportation and so on are the necessary payments that you ‘have to’ take care of. The second priority should be that of savings. Only then should the miscellaneous expenses like buying that bottle of Shiraz or rosé should enter your remote thoughts.
Having a budget will help you get the most out of your hard earned money. It also gives you a sense of control over your expenses. Not knowing where the money goes is one of the biggest cribbing one usually makes and is the biggest cause for extremely bad financial decisions. For instance, how many of us try and use our money in bank for making investments or to optimally reduce the tax outgo? If you knew that you can save Rs 20,000 each month, you could consider deploying meaningful ways of investing that money or putting it to some use.
The classic definition of savings is that it’s the difference between what you earn and spend. Living in a consumerist society with marketing techniques luring us to living pay cheque to pay cheque, it is high time we redefine the old definitions. Rather than making expenditure the priority, it should ideally be what is left after income is saved. Time and experience must have taught us by now that idle money is not good money. So mere saving won’t do. One must always be pro-active searching for vistas to improve wealth. After all, the best thing money can buy is more money.