Tips to budget planning
List your financial goals
List your financial goals, both short and long-term. Priority should be given to emergency fund for unforeseen times, medical expenses or job troubles or loss to house due to natural calamity. Long term goals should include planning for your child’s education and marriage. Short-term goals may be like purchasing a car, or electronics or a foreign trip. But at any given time keep a target of maintaining an amount equal to at least six months’ expenditure safe as savings.
Make lists of your fixed monthly expenses
Make a list of all your current monthly expenses – like utility bills, wages of various domestic helps, loan repayments, health care, school fees, salon bills, grocery and entertainment etc. Even take care of small expenses. For example break grocery in small segments like milk, fruits, meat, confectionery etc. Put an estimated amount wherever exact amount not possible. Maintain a small diary and write down all your expenses, however small, and be consisting in writing the expenses. You will find it pays to maintain an account of all the expenses since you can now see how you spent your money in the whole month.
Compute your monthly income
Compute your monthly income. Take out an average of your monthly income and compare with your monthly expenses and take out the difference. Your savings should be equal to the six months target as savings as we have mentioned earlier. If the difference is miniscule, and then try to prune those expenses which you feel are avoidable like spa visits, frequently eating out, etc.
Use only one bank account
Put down the money in one bank account and pay for all your expenses from that account. This way you will be able to control your expenses.
Final step
Now sit together and discuss your budget point by point. You both should be aware of your financial limits. Your spouse may have some useful ideas about spending your income judiciously. The discussion should be healthy and not a game of up manship.
This way your budget tensions may well be kept at bay.
