6 budgeting rules for a financial boost in your life

Budgeting is a word, best defined as the measurement of expenses. It is the key to a successful financial life if maintained properly.

Any form of income requires a proper budgeting rule, to not exceed financial limitations and reach the planned expectations.

No matter whatever the mode of income is, be it business or personal, all need a good budgeting to track the list of expenses and savings.

From my personal experience, I can say, that personal budgeting is like keeping a virtual manager for your financial purposes. It has helped me a lot in spending sensibly and saving a lot more than I could have imagined before starting off with my career.

Here I will be listing a few of the budgeting methods that I followed as per my requirements, during my rough days, and still follow till date. Guess it will come useful for you as well.

 

  • The traditional way

There is nothing that can show flexibility than this old school method of personal budgeting.

This has got its own limitation though. This process requires intelligence, detailing and along with good decision making. This is undoubtedly for the pros, who are done with investment plans and are trying to bend their expenses.

The game is somewhat like this.

You start penning down your every expense minutely. Do the calculations and see whether it is exceeding your expense limit or not. If it exceeds, then find out where you need to cut down.

After consistently managing this structure for a few months, you will get a good understanding of your needs and will spend accordingly.

You only need to set a limit to your expense.

 

  • Enveloping your dollars

This is the easiest way to divide your income into your expenses. Make envelopes for each of your spending amounts; one each for groceries, bills, transportation, eating outs and so on. Also make one for your savings.

The thing to keep in mind is that you can refill those envelopes, once empty, only on your next payday.

This way you won’t be able to overspend than your dedicated amount that you have set for your each expense.

This enveloping method is great to bring your expenses fragmented. With this form of personal budget you are doing both, keeping a track of spending and not excluding any expense factor.

All you need to do is setting sensible amounts for each of your expenses and categorize them.

 

  • The Zero balance budget

Here we will use the check in, check out method. Your total income will get flushed out as it is!

No! Don’t you freak out!

It is the art of balancing expense and income equally.

You have to entitle every dollar of your income a purpose.

If after calculating your expense, you are left with an amount, you must assign it a purpose, say savings or anything useful that comes to your mind. You need to forcefully make the remainder zero.

This way you will get a clear picture of where your every penny goes.

Helpful for a great number of people, this budgeting gives you wide predictions about all your possible expenses.

Whenever you will assign an amount its new purpose, you are doing a probability for that particular expense. It’s like thousand times you will rethink whether or not to create this new expense. You will always try to find a better option.

This is a time taking but highly effective way to manage money. It is never for the party goers and chill-outers. The moment they will be left out with any amount, all they can think is partying.

 

  • The self-nurturing budget

A budget where you start paying yourself first.

On your every payday, get a certain amount of your income drifted to any savings account or say a 401(k) savings plan. You should not be bothered about this savings.

You will start to spend from the amount that’s left.

When you think you can save more without any difficulty, you can readily invest more into your savings from your expense amount.

This personal budget follow only one rule – Savings first.

 

  • Using only cash

This is the most headache free budgeting dedicated to non-usage of credit cards. We all know that cards can incur huge amounts of debt, if not utilised wisely.

So your rule would be to use only cash and using cards only when necessary.

While swiping your cards you usually don’t keep a record of your expenditure, but with cash you tend to count every penny that goes out.

This I have included in budgeting because it is really helpful in avoiding debts. If once you fall in the traps of debt, it becomes really difficult and expensive for you to get out.

 

  • The 50-20-30 budget

My best style of budgeting. This is the most effective method to cover your every aspect of money management.

This one’s got 3 steps:

The first step is to keep 50% of your net income for your daily needs and basic utilities. These include bills, transportation, grocery, loan payments and anything that’s your requirement.

The second step is to keep 20% of your income for savings. The best for you is to keep a recurring deposit account that gives a good interest rate, where you will invest this 20% of your income every month.

The third step is the fun. You keep 30% of your income for luxury and wants, like vacations, trips, camping, clubbing, etc.

To be kept in mind this is a per month budgeting method, and the percentages are flexible.

Some months you can follow the 50-50 plan where half goes to savings and half for your needs.

You can structure it as per your requirements.

With this we have arrived to the end of this discussion. I can never guarantee you financial independence. But what you can do is follow a couple of these rules that I laid out for you. It will promise you a decent lifestyle and good savings in future if not anything else.

Categories: Personal Finance

The know-what’s of back-to-school shopping

It is that time of the year to start rushing to stores, with a long list of items, in a tensed mindset. Looking for sales here and there. Young adults, boys and girls, college goers, eager parents, all hurrying down the shopping aisles and mall lanes. The children turning heads for branded and marked items while the parents fidgeting or biting their nails.

It is that time of the year again that sends happy smile on the students’ face and devilish grins of satisfaction to the sellers. We are exclusively talking of the back-to-school shopping days.

There will be so many demands and you being a parent will have to fulfil them. It concerns both your child’s happiness and future.

Here we are to help you somewhat with this shopping spree.

We will be listing the points to keep in mind as dos and don’ts of back-to-school shopping.

The dos:

Make a list, forward to shopping and cut down the ‘unnecessary’ or ‘already-have’ items. Arrange all the leftovers from past year’s shopped goods. Write them down in a paper or in the notes section of your smartphone, so that they come handy.

Make sure you buy the textbooks first. If you are done with the learning materials then you will feel a lot relaxed and can simplify your shopping a lot.

If you are shopping for prep school, then consult with the school teachers once. They will be able to give you an idea of all the basic stationery items that your child needs.

Get an overview of your budget beforehand, as you head into a store. Making financial decisions in a shop is sometimes quite attention grabbing and embarrassing.

There is no need to rush and shop everything in one day. It is always advised to surf the market first, compare the prices, and look out for sales. Take your time and break your shopping into a 2-3 days structure. You may shop apparels one day and keep another day for stationery goods.

Mark out the the most wanted items first. These include pens, pencils, binders, files, notebooks, loose papers, glues, crayons, rulers, glitters and so on.

Give it a complete years shopping and buy in bulk. The school items are never left unused. Your child will be needing them every now and then. Moreover shopping in bulk will help you save a lot of money. There are always discounts for items bought in multiple numbers. Even if after a year’s turn you are left with a lot of items unused, it’s good; you can subtract it from the coming year’s list.

Look out for sales. They usually take place in the odd times of the year. Merchandisers and companies throw out these sales in months before or after the school year starts. You can surely buy great number of items, which may also include branded or trendy supplies at a very low price.

You can also use online shopping as a huge plus tool to give it an easy shopping experience.Check out websites like Amazon, Alibaba, where you can find series of deals on a lot of items. The biggest option is for you to just order the items; add it to your cart, check out the list of your “leftover” items and cancel out those that you don’t need or you already have. This will not only help you save time but also energy and money.

The don’ts:

Never encourage your child by completely letting them choose as per their wants. It is you who will be paying out the bills at the end of the day. Make them understand their needs. The best way to make them get what they wish, is to make them do a promise or a resolution. Like tell them, if they score high percentage this year, then maybe next year you will hand out to them a Bieber shirt or a Lucky Luke folder.

Don’t buy unnecessary items by listening to your child. You always know better than them. Make sure to fulfil their needs as it is this time that every child dreams of for the whole year. They have their own plans and you have your own. Sit down with your kid and sort out the goods.

If you are a college goer and you desperately need a new tablet or a laptop, go easy on your parents. You are a grown up now who must learn to value objects and money. Remember, you already owe them a lot for bringing you up.

Never let yourself be misled by the smiles and catchy tunes of the salespersons as they will try to look for their benefits. Choose your items the way you want to. Use your brains and go according to your list of items.

Before we end this discussion, I would say, it is one of those happiest times of the year for shopping and exploring. So go out with your kid and have lots of fun. Make them feel happy and choose what their heart wants. But always remember to keep an eye on your budget and then go hands free on the back-to-school carnival.

Also check out: Educate your children to practice good money management strategies

Have a splendid time.

Happy shopping!

 

Categories: Personal Finance