4 Budgeting advice you wish you knew sooner

New to the world of savings or financial planning? It is just like trying to quit any bad habit and replacing it with a good one. Practicing until you make perfect and exercising self control are the two of the easiest and most effective ways to go about it. When it comes to saving money it is the starting that matters. No matter what you are making a month, the younger you start managing your personal finance like an adult, stay out of debt and work towards building a good credit history, the quicker you will be able to reap the benefits.

There’s simply no going through life without learning to effectively manage your money. When it comes to finances, everyone means business and not all advice will always be in your favor. Do your own research on personal finance, maintaining an online credit score, building a positive credit history and making effective investments before trusting a financial planner alone. Once you have arrived at a budget and financial plan for yourself, stick to it no matter what the excuse or distraction. Tracking the money you are spending also goes a long way in understanding how all the needless expenditures that seem small at the time, add up over a month when unchecked. 

Get in the habit of paying with cash

If there’s one thing that’s common in most Indian households it is our parents’ tendency to teach us self regulation. Most of us were taught that we had to win the things we wanted by achieving something academically or professionally. The trick is to go back to this simple way of delaying gratification. It’s where you hold off on buying the things you want until you have saved enough to pay in cash. This will also help you avert the dangers of putting impulsive purchases on credit and degrading your cibil score. Taking credit has its own rewards, you get to build a strong credit history as well as avail gifts and benefit points. But never lose sight of its ability to draw up high interest bearing debts. 

Save for the worst and spend for the best

If you are serious about being more responsible with your money, get ready to become a lot more cautious. Start thinking of the big picture where there is always a possibility of contingencies and plan ahead for them. Consider starting an emergency fund where you religiously set aside a part of your paycheck no matter how many bills you have to pay that month. This is not to say that you deprive yourself of the finer joys of life. But it is time to stop being reckless with your indulgences. Make your splurging sessions fewer and far between and only on things that will serve you over the long term. If you are putting money in a standard savings account, your money’s value may erode over time due to inflation. You may start looking at making smart, high-yielding investments like mutual funds, online gold savings schemes, among others to help your money grow.

Gamify your financial plan

This one is for the overspenders who are trying very hard to bring financial discipline into their lives. It can be hard to motivate yourself to save money when it feels so much more rewarding to spend your hard earned money on things that make you feel good. So here’s a simple plan, don’t take it all away at once. This way your chances of relapsing into full fledged overspending increases. Consider starting a self practice where you gamify your budget, with an outcome involved. Each time you hit your monthly savings goal, you get to give yourself a small reward. Plus, the added satisfaction of knowing that the money goes into strengthening your long-term financial health.

Apply the golden budgeting rule

One of the easiest ways in which you can train yourself to manage your money better is to start differentiating between needs and wants. Prioritize spending on that which is essential first, including groceries, housing and daily commute costs. Next comes your financial goals, such as paying off debts, putting aside emergency funds and saving for rainy days and retirement. In such a scenario, you can consider leveraging the 50/30/20 budget rule, which covers all your major spending categories. This essentially means to segregate 50% of your paycheck towards absolutely unavoidable expenses, 30% toward wants and the things you enjoy spending on and 20% toward savings and debt.