Budgeting is a powerful tool to learn financial management. One who is budget-savvy, is the best money manager. To know more, check out this article!
Your money craves a lot of attention. In case you avoid managing it, it starts to slip out of your hand, quite swiftly. No matter if you have plenty of it or if you are a mediocre earner, money management is the essence of wealth accumulation.
So, are you doing enough for your money so it can be enough for you in return?
If your financial health is ill, you know that something is definitely wrong with how you are looking after your money. From the day your salary is credited to the day it ceases to exist, every decision in-between is what determines how much financial savvy you are.
You may not want to be too excited about investments. But even for the basic comforts to exist in your life, you need your financial health to be all sound.
What to do then? Where to begin?
The answer is budgeting.
Budgeting is the lead component of financial planning. Just like you journal to cleanse your mind, you do budgeting to pick out the flaws in your spending.
In simple words, budgeting is maintaining a budget. Your income, your expenditures, your savings, etc. all things are to be jotted down before your eyes and then deciding on what exactly to do with your money.
Sounds simple, right? It may not be. The reason being, sometimes the flaws are too minute to get noticed. You may be reckless in spending, but since that is a habit, you may give a green flag to it.
Therefore, as it is always said, always be realistic when budgeting. Write down realistic claims and carefully analyse your own habits. The good and the bad of your spending habits are to be decided by you.
So, here is a small list of things you may want to consider to make budgeting more useful for yourself.
How to save and manage money efficiently through budgeting?
1. Think of a good strategy
Budgeting can help you figure out your personalised most comfortable way to manage your money. You may not like to maintain a regular monthly budget, but just religiously practising this for 3 to 4 times a year should be enough to know your financial habits.
In a year you will feel more aware regarding your own finances and may even decide to try out ways to expand money.
However, it is possible only if budgeting is done sincerely. Writing down your income and then barely being honest about possible expenditures is not how you maintain a budget.
Budgeting requires one thing: analysis of every potential thing that you frequently spend money on. If you figure that out, the only thing left for you to do would be to eliminate the bad spending and focus more on money expansion and wealth creation.
2. Get your expenses to align with your income
The next great help you get from budgeting is to align your expenses with your income. When you maintain a budget, you will know when you can spend over and above your budget and when not.
Also, making investments or maintaining at least an emergency fund would be only possible if you save. And budgeting is exactly for that.
Spending only up to what you can actually afford is the best habit you can inculcate. By going away from materialism, you can actually save a lot when you won’t spend on useless things.
Those savings can be diverted to many other good things- that trip you always wanted to go on, that house you wanted to buy, that venture you wanted to invest in, etc. In addition, don’t forget to buy a good insurance policy- you will definitely need it.
3. Financial ambitions? Keep them realistic
Next, a budget is a nice way to set boundaries for yourself. When we say spending is to be reduced, we also mean that the things that you save for are realistic enough to keep you going.
Setting aside money for something too big right in the beginning may seem like a good option, but after a certain time, it can become cumbersome and you may quit saving altogether.
Keep in mind that to make saving a habit, you will need to regularly infuse a dose of motivation. The easiest way to do this is to set small goals in the beginning and gradually move on to the next.
Especially if you have just begun earning, make sure you focus more on your health and save actively. The earlier you begin saving, the better it will be. This way, you will be able to start investing early and achieve all your financial goals.
4. Less income? Split it
A budget can be of great help, not only if you earn high. If you have a low income, you definitely need more budgeting. Deriving the right balance between your savings, spending and investments is very difficult when there is less money in your hands.
So, here is what you can do with a budget: follow a minimalist lifestyle, save as much as you can (especially in the beginning), and start investing early. Your focus should not only be on securing investments. You must focus your attention on high-return investments.
The more actively you save and invest, the more likely you will be to achieve your goals. With budgeting, you will become aware about what money you actually have and what you don’t. So, being a reckless spender would be out of your league right away.
Budgeting is your need if you struggle to manage not just your money but if you actually fail to strike the right balance in saving and spending. Savings and investments can be a tough decision to make. So, to get a hold of your financial health, start budgeting today!
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