Budgeting all your expenses can be a time taking task. For many, it is similar to gymming. The enthusiasm to do gymming and exercising is at its peak at the beginning of the year, but slowly the energy comes down. Something similar can be said about budgeting and financial planning too. It is a great habit to have and can save you a lot of money, but money management is not as easy as it sounds. It requires a rigid financial discipline and consistency.
If you are thinking of your personal finance and are planning to start budgeting in 2021, here are some tips that might help you:
- Plan short term goals - If you wish to save 1,00,000 by the end of the year, start by keeping goals to save 10,000 each month instead. This will help you be on track and make your goals seem more achievable.
- Focus on necessities - Whenever you start budgeting, make sure you go in order of your priority. For example, setting aside at least 10% of your income should be budgeted before you budget for a vacation you have wanted to take.
- Budget with your partner - A successful budget takes into account the opinions of everyone who is going to be affected by it. Discuss the store with your partner and make sure that you are both on the same page about your financial goals.
- Review regularly - Budgeting is more of a journey than a destination. Every step is a learning process. So, make sure you learn as much as possible and act on the mistakes you made in the previous budget. Do not get disheartened if you are unable to stick to the first budget you create.
- Automate as much as possible - One of the best ways to stay consistent with budgeting is to automate as many necessary payments as possible. These would include rent, electricity bill, etc. You must automate at least the investing part of your budget.
- Keep a track of your expenses - One of the most important financial literacy habits you must teach is keeping track of your costs. Make sure you are aware of where your money is going to identify areas where you are overspending and fix them.
- Keep a buffer - When you create a budget, keep a section for miscellaneous expenses or calculation mistakes. There is a big chance that you might need to spend a little extra on something then you predicted. This is the section that will help you in that case.
- Use an online tool - Use an app like Wizely to better manage your money better. Financial planning can be difficult, and it is great to have a resource where you can learn and implement your learnings to create better financial health.
- Read - Read more about personal finance and budgeting. As we discussed, budgeting is a learning process. Learning more about the subject will give you both ideas as well as the motivation to perform better.
- Love yourself - Most notably, love yourself for trying. Habits like saving take time to develop. If you are working towards developing these habits, you are already half way there.