Kareena, a young 30 something woman recently joined as the head designer in a fashion designing company. Even after getting a large pay hike, she still was frequently worried about not being able to save much from her salary at the end of the month.
Well, in order to save enough by the end of the month, all you have to do is budget, budget and budget. And NO, you don’t have to be a financial expert to do so! Just by spending 2-4 hours at the beginning of every month can help you manage your money for the entire month. By creating a monthly budget, you can calculate monthly expenses, especially that go towards bills, EMIs, rent etc, cut them down and manage them. It will also help you discipline savings.
To create a budget, follow these steps:
1. Identify your income:
Budgeting starts with your income. This is generated via your job if you work somewhere, if you own a business, take up side gigs, freelancing, and so on.
2. List your expenses:
Make a list of all expenses you need for the entire month, which includes- necessities like bills, EMIs, rent, groceries etc. and other essentials like investments, insurance, emergency fund etc.. Also list down expenses needed towards subscriptions, shopping, dining out or ordering in and seasonal expenses like any festival (eg: Diwali) or someone’s birthday and any other expenses you want.
3. Set goals:
Before you allocate your budgets to different things, it is important for you to set realistic goals. Start by identifying your short term and long term goals, which can be buying a car or traveling to your dream destination and set a time limit by when you want to achieve this like 1 year or 2 years and the amount required for example, 7 lakhs. This will help you understand how much money you need to save and invest each month.
4. Separate needs and wants:
Once you have listed down your expenses, it is time to separate them based on needs and wants. Your bills, EMIs, rent, groceries, investments, etc. will come under needs whereas your subscriptions, shopping, dining out etc will come under wants. Now it is very crucial to understand the difference between the two. A need is a necessity, whereas a want is something that improves your quality of living. By listing these down, you can consider shifting something from your “wants” list maybe to the next month if you do not have the budget or are planning on cutting down on your subscriptions or shopping sprees.
5. Design your budget with the 50:30:20 Rule of Budgeting:
– 50% of your income should go towards bills, utilities, rent etc.
– 30% towards shopping, outings, splurges etc. This is your fun fund.
– 20% towards your savings and investments.
6. Put your plan to action and stick to it:
Start executing your plan and make sure you stick to it, in order to achieve your monthly targets.
7. Review your plan regularly:
Now, we understand that there may be some emergency or sudden expenditure for a repair or maybe someone’s last minute planned birthday, for which you might end up spending some money. Whatever the reason is, make a note of it so that you can adjust this by reducing your expenses somewhere else, or adjust it on your upcoming months budget sheet.
Yes, it is that simple! Check out LXME’s Budget Planner to keep track of your expenses.
other blogs
Smart Lifestyle Smart Money March 16, 2023
Improving your relationship with money
Money is an integral aspect of our lives, but many struggle to maintain a healthy relationship with it. Whether it’s overspending, debt, or simply feeling like there’s never enough, a person’s relationship with money can cause stress and anxiety. However, there are ways to improve your relationship with money and create a more positive financial […]
Smart Lifestyle Smart Money March 15, 2023
Why is Term Insurance important for Women?
Do you also think Term Insurance is not essential for women? Then, let’s break this myth and understand why life insurance is important for women. As per LXME’s Women and Money Power Report 2022, 58% of women have no insurance (life or health) in their name😨. Shocking right? Let’s bridge this huge gap together!! Why […]
Smart Career Smart Money March 11, 2023
Simple Money-Making Ideas for Stay-At-Home Parents
Being a stay-at-home mom/dad, your work is technically never done. It’s not an easy job and certainly not lucrative because warm hugs and your child’s cute drawing won’t pay the bills. But thankfully with the advent of technology and possibly the only silver lining of a pandemic, work-from-home jobs are more common than ever. Here […]