A budget that you can follow


In today’s day and age where inflation is hitting the roof and even a meal outside for a family of four is a luxury, it is prudent for people to make and follow a budget to maintain a lifestyle. What’s more difficult is that while the value of money has reduced, our salaries/incomes are still the same. Thus, there is even more emphasis on a budget.

Making a budget to keep track of expenses is not difficult, but following it is. Many people very enthusiastically prepare a budget and follow for a couple of months before losing interest in it. Some even avoid making a budget as they feel they would have to bring down their standard of living and their life would get very rigid. This article will help you clear that misconception.

Given below is a step-by-step guide to make and follow a budget which would help you lead a comfortable life while curbing unnecessary expenditure:

Check your financial statements: It is important to keep track of your financial statements in order to make a budget which can be followed easily. Keep a regular check on your utility bills such as electricity, gas, water bills and monitor if there is a change in your consumption pattern or the rates. Also, keep a record of other financial documents such as Form 16, credit card statements and returns from investments. This would give you a clear picture about your finances.

List income from all sources: A salaried person should not only take into consideration his monthly income, but also the income from other sources such as rental income, if any, returns from investments, reward points on credit cards and/or gift vouchers. In case of businessmen, it may become difficult to always estimate the income, hence, an appropriate figure can be assumed by which total income should be calculated.

Finding out your total expenses: When it comes to estimating monthly expenditure, one must set aside fixed expenditure which remains constant over time such as expenses on household help, drivers, utility bills, children’s school fees, loan Equated Monthly Installments (EMIs) etc. There are some expenses which more or less remain the same such as grocery expenditure. One should keep a check on leisure expenses as they may vary to a large extent. If you feel that your expenses are more than your income, you can cut down on leisure activities. For example, instead of eating out three times a week, you can reduce it to once or two times a week.  

Saving or spending: Based on your income and expenditure details, you can gauge at the end of the month if your savings or spending component is higher. If you are overspending, make a conscious effort to curb it and increase your savings. If your savings are higher, you may use some of the excess amount to raise your standard of living and some can be directed to investments.

Are you on the track? Check monthly: The point is not to make a budget but to follow one. Once a budget has been prepared, it is important to keep a check on whether you are able to follow it. Do not prepare a very strict budget at the first go. Set reasonable targets which you can achieve and raise the bar gradually.



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