The Budgeting Rule Book

 By Daksha Gehani

Conventional wisdom dictates that budgeting is a wise “life-add-on” to achieve your goals successfully. Sadly, people sometimes get unreal or side-tracked, making a somewhat over-the-top budget for themselves.

And that’s precisely why your budget doesn’t work out. It’s supposed to be realistic. This way, you’re aware of your limits and opportunities.

Your budget should be unique. If you are someone who is a spendthrift, then you should be strict with yourself and think of methods to help you sidestep and overcome that weakness. One way is to set aside the savings money automatically (automate your savings) at the start of the month (or whenever you receive your salary/allowance) and then adjust your spending with the remaining amount. This way, you can stick to your budget and customise it to fit with your goals and lifestyle.

Here are a few things to keep in mind as you take off:

1. Incoming! 📩

Setting aside some money every month for your savings is only the beginning with budgets, good news is your saved money can work for you. The first step would be to have a direct debit on your monthly incomings. Next is to invest to earn interest.

You can invest it into businesses that seem promising to you, into stocks, bonds or even in yourself. If you think your attendance in a finance workshop would help you acquire a skill with certification that would allow you to progress further in your career, then investing in yourself is the right option. In the long run, investment usually pays off and will enable you to achieve your goals faster.

2. Sick leave 💉

Whatever job you may be at, the fringe benefits for everyone differs. You may not get paid for the days you take off due to sickness or other reasons. In that case, you need to allocate a certain amount of your savings; set aside a budget category for such days (if your job mainly entails such situations) or let personal insurance take care of it. There are available insurance products for sick days; you get paid to help with the hospital bills.

3. Repairs 🛠️

Budgeting for your home? Do you genuinely set aside an account for unexpected repairs for your home?

It is another detail that is often left out and ends up denting your budget – That’s so stressful! You’d even give up the whole idea of budgeting thinking it doesn’t work. That’s not the solution; unprecedented changes such as repairs come up no matter what you do, the point of budgeting is to expect the unexpected and be able to sail through.

Saving for the unexpected can lessen the burden, you can use the 50/20/30 rule on your savings – invest 50%, keep 30% in the savings account and 20% in your current account for the unexpected.

4. Everything means EVERYTHING

You may be in a situation where you earn in small amounts (or big) from multiple places. It is essential to budget for ALL of them together. Collect your income as a total and create a plan for it. And if “free” money comes in, account for it. If you don’t take care of these details, you’ll end up blowing money that could get you out of crises you’d face six months or a year later.