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.
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
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
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.
Segregate your expenses into FIXED (Rent, Electricity Bill) and Variable (Hotel Food, Travel)
This helps you PLAN for the Variable
expenses are normally non-negotiable but FIXED expenses can be scaled down.
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.
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.
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!!
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.
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
• 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
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.
very much for reading the article
Please make sure you follow this and elevate your Financial Life
All the best
Author – Don’t Retire Rich