Kolkata, January 2: Keeping control of one’s expenses is one of the resolutions many people make in the new year. To do that it is important to make a budget and stick to it. Here are 5 things to do that will help you stick to a budget this new year.
1. Budget together: If you are married, it is important to involve your partner in the entire exercise as family finances will affect you both. Both spouses need to have an idea of your income and how the money is being spent. Future goals also need to be set together. Budgeting is all about making decisions that affect the way you spend your money. If you decide to cut out on eating out, it has to be decision by both partners. Similarly, both partners need to decide whether they want a gym memberships or subscriptions to online magazines and steaming sites. All decisions should be taken together with the other person in confidence.
2. All months are not the same: Your income may be the same every month, but your expenses are likely to change. It will be higher in the month your car needs maintenance or if you are saving up for a vacation or a gadget. And do not forget that Diwali will be around the same time this year too. So when making a budget, do not keep it too tight, but allow a bit of a buffer. This will help you prepare for additional expenses in your budget. The idea is not to be unprepared for months where there will be extra expenses. For sudden expenses, you can fall back upon the emergency fund, but certain expenses can be planned in advance and factored in.
3. Start with the needs: When you are making a budget, start with the important categories first. Rent or EMIs, groceries, insurance premium, school fees and so on should be the first priorities. The idea is to differentiate between needs and wants. Take care of the needs first. You cannot miss paying your EMI or not pay your health insurance premium. Next comes discretionary expenses or the ones that fall under wants. Eating out, watching movies and even Netflix subscriptions fall under this category. Ok, Netflix subscriptions may be a need for many, but you get the drift! If you are spending money on things you do not need, you will run out of money to spend on things you need.
4. Pay off your debt: It may seem obvious, but you need to pay off your debt first, especially the high interest debt like personal loans and credit card loans. This kind of debt is very expensive and spoil the most carefully made budget. Use any windfall amount you have to pay off such debt. Also, stay away from loans however easy it is to get one. When buying an expensive gadget online, avoid the temptation of converting the purchase into EMIs. Even zero interest loans can hurt your budget as you need to factor in the EMI every month.
5. Cut down when you have to: There are times when you have to cut down on your budget. These cuts could be rather drastic, but they need to be made under some circumstances. Remember that if you are trimming your budget and cutting out some expenditure, it may also be a temporary solution to get you through a rough patch. For example, you may decide to shop for clothes at a discount store rather than splurging on a branded apparel. Such sacrifices pay off eventually.
