Mar 21, 2022 ●15 min read
4 Budgeting Tips for Excellent Financial Health
The world of finance is a complicated one which even the best of us often fail to navigate properly. Irrespective of the fact that we might be experts in other areas of life, personal Loans is something that we often struggle with.
While there are many individual aspects to managing one's personal finances, one which stands out the most is budgeting. While standalone budgeting is sufficient for most, if you want to maintain an excellent financial health, adapting practices such as budgeting with a purpose is crucial.
But the question remains as to how can you maintain an excellent financial health? That is exactly what we will be discussing in today's blog post. Without further ado, let's get started.
One of the first aspects we need to understand is the essence of budgeting. In simple terms, budgeting can be defined as the process of expertly managing your cash flow wherein each of your expense and income transactions are accounted for, such that you have a clear view of how your money is spent as well as earned.
For example, if you earn ₹25,000 every month and at the end of each month you are left with ₹2200 after all expenses, however, you have no idea of where your money was spent, chances are that you have not budgeted and subsequently not tracked your expenses, both of which are detrimental to your financial health.
On the other hand, in the same situation, if you had created a mindful budget, you would not only have gained a greater insight on where your money was actually spent and earned from but also how much you were able to save and what fueled the same.
Thus, as you can understand, budgeting is essentially a process which enables you to better manage your financial health.
Now that you are aware of the essence of budgeting let us now take into account 4 budgeting tips you can effortlessly leverage to gain back control over your personal finances.
A common misconception among those who are budgeting for the first time is that it can only be done at the beginning of every month and not at a later date.
While the idea behind this is well-intentioned, it is flawed to the degree that you can adjust the dates of your budget as per your pay cycle and not the monthly calendar.
For instance, if you get paid on the 15th of every month, then instead of making a budget for the 1st of every month to the 31st, you can set it up to extend from the 15th of one month to the 15th of the next. This way, not only will the budget adhere to your pay cycle, but it will also let you properly account for all your expenses.
Followed by the first misconception of setting the budget dates as 1st to 31st of every month, another misconception most beginners commit is only creating their budget inside their head and not writing it down on a piece of paper.
While it is easy to assume that you can stick to a mind budget, the reality could not be further from the truth. The fact of the matter is, without writing down your budget, it becomes inherently difficult to keep track of your expenses, given the fact that there are so many transactions we embark upon on a daily basis.
On the other hand, by simply writing down your budget and categorizing it, you will immediately increase your chances of not only meeting it but also effortlessly keeping track of all your transactions.
These days due to the wide array of advancements made in fintech technology, there are a number of apps available in the market which streamline the process of accounting each one of your transactions.
For example, there are a number of personal loan app in both the Google Play Store as well as Apple App Store, which automatically read your SMS and categorise your spends.
Automatic text recognition and categorization not only helps you keep track of all your transactions without any extra effort but also be prepared for planned expenses. For example, a great feature of such applications is to notify you in advance if you have any upcoming payments due such as EMIs from instant personal loan.
This not only helps you prepare in advance for upcoming payments but also ensure that you are always on top of your finances.
While the definite purpose of creating a budget is to account for all your transactions, a greater aim is to save for your future.
Now while it is true that the idea of investing your hard earned money is an interesting proposition, in reality, most people fail to accomplish their investment goals mainly because they lack the methods to do it properly. While earlier you had to compulsory invest your money manually, today you can effortlessly leverage tools such as automation to invest your money automatically at regular intervals.
For example, all you need to do is set up a monthly SIP of ₹500 and every month on your chosen date, the same would be deducted from your account automatically.
This way, not only will you make sure that you invest money regularly but also fulfil your greater goal of saving money every month for future aspirations as well as rainy days.
Budgeting at first glance might appear to be a difficult task, especially when you are a beginner. However, if you diligently follow through the steps mentioned above, we are sure you will get a hang of it in no time. All the best.