5 Tips for better household budgeting
Why is budgeting essential?
In simple terms, budgeting means tracking expenses, controlling spending, and saving money. In the past two decades, everything from petrol to groceries has seen a hike in price. Quality of lifestyle has increased significantly, and so do the expenses. But income remained the same. And that's precisely why, for every household, budgeting is essential.
Every school and college in the country should teach how to manage finances. To achieve bigger financial goals like buying a house or a car, everyone needs to learn to manage monthly expenses.
Five tips to come up with the best budget:
1. Planning your monthly expenses
Planning your expenses will ease your monthly budgeting process. If you ever feel difficulty managing your budget, this trick will save you from a lot of stressful nights. Remember to break down all your expenses before spending your salary without thinking. This way, you will know what unnecessary items you are spending your money on.
This way, you can efficiently prioritize your household budgeting. Saving yourself a lot of money you can invest in making more money.
2. 50/30/20 rule
It is known as the right-hand thumb rule of dividing your income in a better way. As per this rule, 50% of the earnings should be used for expenses such as bills, food, and transport. Spend the next 30% of the earnings on wants like fun activities, shopping, or traveling. The Remaining 20% of the earning is to be saved for future emergencies or, perhaps, to pay off pending debts.
Especially for students living in hostels or working in a corporate sector away from home, this method of monthly budgeting can help them grow financially.
3. Splitting of expenses
Whether you are a student or a family man, splitting bills with your roommates or partner is always a clever choice to manage your expenses. Apartment rent, electricity bills, and groceries are a few things that you can easily split between two people. It saves plenty of money for both parties and makes living much affordable.
4. Use budgeting apps to keep tabs on expenditure
For those who do not like budgeting or don't have any time to calculate all the expenses, this one will be the best pick for them. Cleo, Moneyhub, Zeta are just a few names that are popular among the crowd. These apps allow you to maintain a clear record of your monthly expenses.
Keeping track of your monthly budgeting has been made easier so that you can reach your financial goals sooner.
5. Paying EMIs on time
Not just your bills but paying your monthly EMIs are also crucial if you don't want to lose money. If you're paying off your EMIs late, you are not just losing money but also building a poor credit score for yourself. And you don't want that, do you?
So make sure you pay your EMIs on time to maintain a good credit score.
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What are the benefits of budgeting?
- Saving money for a better future.
- Cutting down unnecessary expenses.
- Preparing you for emergencies.
- Leading to a sustainable lifestyle.
- Keep you out of debt.
What to keep in mind when preparing a budget?
Make a list before you spend. Make sure you divide your income so that you save at least 20% of the earnings.
Most common pitfalls of budgeting.
Some of the most common pitfalls of budgeting are not saving for emergencies, focusing too much on saving, and not revisiting the bills at the end of the month.