Step into the new year with a con­crete bud­get

The Financial Express - - PERSONAL FINANCE - The writer is founder and CEO of Ffree­dom Fi­nan­cial Plan­ners. Views ex­pressed are per­sonal

THE new year is a good time to dis­ci­pline the mone­tary as­pect of our life in or­der to im­prove the health of our fi­nances. Here are some fi­nan­cial guide­lines that can help you to dis­ci­pline your money and keep your per­sonal fi­nances on a steady path.

Bud­get is the key

Bud­get in­deed is the first and fore­most step of any kind of fi­nan­cial plan­ning. A well-thought out bud­get, set at the be­gin­ning of a New Year, can help you evade many fi­nan­cial glitches. It not only gives a broad frame­work of the ex­pen­di­tures that are likely to come up, but also gives you a clear pic­ture of your fi­nan­cial limit, which in tur n can curb you from go­ing over­board with splurging.

Plas­tic money dilemma

Be­yond any doubt, credit cards have made it con­ve­nient for shop­ping. taken con­ve­nience to another level. How­ever, if a credit card is not used ju­di­ciously, it can ruin your fi­nances and can eas­ily lead you to a debt trap.

The chances of fall­ing into a trap of this na­ture can be re­duced sub­stan­tially by keep­ing a track of all the trans­ac­tions. Main­tain a record/log of all for your cards’ trans­ac­tions to keep a tab on your credit li­a­bil­ity.

Non-re­cur­ring ex­pen­di­ture

While mak­ing a fi­nan­cial plan for the next year, do not miss out on non-re­cur­ring ex­pen­di­tures. For many of us, only med­i­cal emer­gen­cies ac­count for this type of ex­pen­di­ture. How­ever, some­thing like va­ca­tions should also fea­ture in your fi­nan­cial plan since tak­ing out a lump sum amount at one go can leave a dent on your per­sonal fi­nance. By es­ti­mat­ing the amount you need for such an ex­pense, cre­ate a monthly fund for such ex­penses.

Hand-to-mouth life­style

Ir­re­spec­tive of whether you ear n R50,000 a month or R5,00,000 a day, if you barely main­tained any gap be­tween your in­come and ex­pen­di­ture then this new year should be a wake call for you to ad­dress this alar ming sit­u­a­tion. Liv­ing from one pay cheque to another is like liv­ing on ten­ter­hooks. One un­fore­seen ex­pen­di­ture can land you in a fi­nan­cial mess. If you find your­self fac­ing the heat of such a life­style, then this year, work on ei­ther to in­crease your in­come or re­duce your ex­pen­di­ture.

Con­scious sav­ing

If all this while you have been sav­ing only what­ever was left in your ac­count at the end of ev­ery month then don’t be sur­prised to see min­i­mal sav­ings. It is im­por­tant to put in con­scious ef­forts in sav­ings and the best ap­proach is to set aside the amount in- tended to be saved right at the start of the month. Auto debit to­wards a mu­tual fund or open­ing a re­cur­ring ac­count can be quite handy.

Need-based spend­ing

Don’t fall prey to the shop­ping bug. To keep your fi­nances in good shape, in­cul­cate a need-based spend­ing ap­proach. Buy­ing stuff just be­cause your friend has bought it can have a very dam­ag­ing ef­fect on your pocket. Re­mem­ber, we all are dif­fer­ent and so are our needs. What oth­ers have got may or may not work for you and your fi­nan­cial lim­its.

We all have heard this count­less times that money is not ev­ery­thing in life. How­ever, we can­not deny that it is a vi­tal tool to get many things in our life to make it more com­fort­able. So, with the proper money-man­aged life step for­ward in to the new year.

SUMEET VAID

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