Living a
life eagerly waiting for that SALARY DAY every month end not only leaves you with a lot of stress but also drains your entire energy, focus on TODAY rather than focusing
on planning and creating Wealth for your future life.
The BASE for
a Strong Financial Life is to have a BUDGET.
You need
to tell your money WHERE to go rather than wondering WHERE DID MY MONEY GO?
Budgeting
helps you in this. If you don't know where the paisa go, soon you'll lose the
rupees... then the house.
Remember you are the BOSS of your personal finance and since you are not answerable to anyone,
the tendency to spend WHEREVER is high.
Be
disciplined.
Budgeting is
for everyone. Poor, Middle Class, Rich... everyone. No matter how big or how
small your monthly spending is... budgeting helps you keep a track of your
spending and helps you plus the unwanted unknown spending that was happening by
you. Budgeting is driving your car with
EYES WIDE OPEN.
Good
budgeting helps you avoid Debt, plan for annual big expenses like Festivals,
School fees and even for Huge Once in Lifetime expenses like Buying a
Car, Buying a House and even planning for your Dream Retirement
1st step:
Start by
writing in detail about what your expenses are every single month. Write a plan
for the month's expenses and STICK TO the IT
Use Notes,
Excel Sheets, Mobile, or whatever helps you to maintain this. Writing this
down will help you to review your past expenses and help realise and eliminate
all those unwanted expenses
2nd Step:
Prioritise
& Eliminate
Prioritise
ruthlessly. Avoid unnecessary expenses.
Avoid
expenses that are intended to SHOW OFF.
Avoid eating
out and upgrading that smartphone unless necessary. Ruthlessly ELIMINATE unwanted expenses like
Memberships, subscriptions to TV channels that no one watches, magazines that
no one reads, etc
The access
to Credit Cards and other loans has spoilt the middle class and is preventing
them from building their wealth and becoming rich.
Avoid the
Zero EMI and Discount Sales unless you are ACTUALLY IN WANT of the
product/item.
3rd Step:
SEGREGATE
Segregate
your expenses into FIXED (Rent, Electricity Bill) and Variable (Hotel Food, Travel)
This helps
you PLAN for the Variable
Fixed
expenses are normally non-negotiable but FIXED expenses can be scaled down.
For
example:
Do you really need a 55-inch TV when a 42-inch is enough?
Do you really need an SUV car when your
family is small?
Minimise
them wherever possible as FIXED expenses have a greater impact on our Savings.
For both
Fixed and Variable expenses, a little bit of advance planning helps you save a
lot.
In fact, for
example, if you plan your family trip properly, you can get discounts on Hotel
Rates, Flight Tickets and thus save a good amount of money which can then be used
to Invest for your Retirement, etc
Even while
buying a Mobile phone, if you could buy it during festivals, there will always be
discounts and you could end up saving a few thousand rupees.
4th STEP:
Keep a
portion for unplanned emergencies.
Life doesn’t
go as per our wishes and there are always googly thrown at us.
An emergency fund helps us be prepared for home repairs and replacing non-working equipment.
Besides this
emergency fund, Health Insurance is compulsory to help us tide over medical
emergency expenses.
5th STEP:
INVEST THE
DIFFERENCE
This
budgeting is sure to help you SAVE MORE.
Now that you
have saved more, make sure that the money is INVESTED and invested as per the
Asset Allocation, Risk Horizon, and Gold Time Frame.
Take the
help of a Good Financial Expert and invest accordingly.
THE BEST WAY
TO SAVE AND INVEST IS TO AUTOMATE.
As soon as
you get the monthly income, first INVEST the planned amount and then keep the
rest of the amount for your monthly expenses.
Assume as if
the INVESTMENT is a LOAN TAKEN FOR YOUR FUTURE GOLDEN YEARS and you are paying
the EMI for it!!
6th STEP:
REVIEW AND
MAKE NECESSARY ADJUSTMENTs:
Once every 3
months, sit down again with your life partner and review your budget list to
understand if everything is on track.
This review
also helps in making adjustments wherever necessary especially if there is an
increase in monthly income (salary) and even expenses (fees, etc)
BUDGET is a
great tool in making your life a Financially successful one.
FINAL WORD:
BUDGET will
help get you.
• A Clearly Visible Sustainable Monthly
spending plans
• Practical Ways for reducing your monthly
bills
• Handling debts if any and gradually clearing
them completely.
• Help in identifying and distinguishing
your Goals be they Short Term, Medium Term, Long Term
• A Clear-Cut vision of Future Family Needs
• And of course the various sources of monthly revenue
Planning
your finances without budgeting is like eating food without salt.
Adding
little salt is not a big task, and think about the difference it brings to
your food.
Whenever in the future,
you do get a raise in monthly income, make sure that 50% of the Raise is
compulsorily diverted towards INVESTMENT.
This will
boost your Retirement Kitty and help you Retire Rich and Retire Early
Remember
that there is a huge gap between WANTING TO SAVE & ACTUAL SAVING and this
gap can be easily filled by BUDGETING.
The BEST
budget according to Financial Planners is
50% Needs
30% Wants
20% Savings
Follow the
50-30-20 rule and win the Wealth World
50 percent
of the earnings after tax should be used towards necessities.
30 percent
of the money should be spent on luxuries or wants / desires.
20 percent of the money should be saved and invested towards your financial goals.
Thank you
very much for reading the article
Please make sure you follow this and elevate your Financial Life
All the best
Srikanth Matrubai
Author – Don’t
Retire Rich
Srikanth Matrubai
https://t.me/joinchat/AAAAAELl4KUnaJzi-JJlDg/
