How to manage your money in daily needs?
Managing daily expenses is an essential aspect of personal finance. To some it is an art, for some it is a learned skill. In either way, it needs to be a mindful act.
The first step towards financial freedom is accurately tracking your monthly expenses, which will help is plan our daily needs. Tracking your spending, will give a perfect picture, where money is going and how would we like it to go. Post this, one can make prepare monthly budget, with keeping in mind daily needs. Daily needs can be managed, by taking in account one’s monthly statement and keeping in mind one’s spending pattern. There are a lot of financial planning and expense management software/apps floating on the internet. They segregate and aggregate your expenses, track your investments, and manage a bill calendar, among other things. Spending is both fixed and variables. Fixed are less likely to change like rents, insurance etc. however one needs more room for variable expenses like vacations, food, shopping etc. keeping a tab on these variable expenses or impulse buying, one can secure stress free money management in the later years.
By Archana Nilesh Gandhi
Here are some tips for managing your daily expenses.
Planning Monthly/weekly budgeting
Helps one to spend within set limits. As you have been earning for a while so you will have a fair idea as to how much you tend to spend things. As you approach the limit set for a particular expense, you would automatically slow down the expenditure in that category. You can decide the budgets based on the expenses made over the last few years and then fix the expenses in your budget accordingly.
Prioritize Essential Expenses
Ensure that you cover your essential expenses first, such as rent, utility bills, and groceries. These are the necessities that should be allocated the highest priority in your budget.
Cut Back on Non-Essential Expenses
Analyse your spending habits and identify your non-essential expenses that can be reduced or eliminated. This may include dining out, subscriptions, impulse purchases, or shopping. Consider alternatives like cooking at home, using free subscription options.
Save for Emergencies
Few things come without knocking your door, we should always be prepared for such testing times. Its always essential to set aside a portion of your income for an emergency fund. This fund will provide a safety net during unexpected financial situations, such as medical emergencies or job loss.
Automate Savings
Make saving money easier by setting up an automatic transfer from your salary account to a separate savings account. This way, you won't be tempted to spend the money before saving it.
Comparison Shopping
Before making significant purchases, compare prices from different vendors or websites. Look for discounts, offers, and promotions to get the best deal possible.
Use Cash for Flexible Spending
Consider using cash for discretionary expenses like entertainment or eating out. This can help you become more aware of your spending and prevent overspending.
Avoid Instinct Buying
Before making a purchase, take a moment to evaluate whether you genuinely need the item or if it's an impulsive desire. Delaying gratification and thinking through your purchases can help you make more informed decisions.
Plan for Long-Term Goals
Apart from saving for emergencies, allocate funds for long-term goals like retirement, buying a house, or higher education. Consider investing in suitable financial instruments such as mutual funds or fixed deposits to help your money grow.
Follow the 50:30:20 rule
Spending 50% of your income on your needs, often constitutes to the following:
• Housing: Mortgage or rent
• Transportation: Car payment, gas, maintenance and auto insurance; public transportation
• Health care: Health insurance; out-of-pocket medical costs
• Life insurance
• Utilities: Electricity and natural gas; water; sanitation/garbage; internet; cell phone and/or landline
• Groceries, toiletries and haircuts, and other essentials
• Child or family care
Spending 30% on your wants, which you can make sure you’re not spending too much on things you don’t need and also ensure that some income is set aside as savings.
• Clothing, jewellery, etc
• Dining out
• Outings
• Gym or club memberships
• Travel expenses (airline tickets, hotels, rental cars, etc)
• Cable or streaming packages
Spending 20% would contribute towards your retirement, emergency and other savings.
• Reducing debts, in today’s world where we can buy anything and everything on credit or EMI. These are additional expenses that needs to be monitored. If this criterion goes up and down, which in turn impacts the daily needs.
• Invest variables or promotions, you must be well aware about the variables or bonuses. They need to be planned and invested properly.
Conclusion
Kindly remember, managing daily expenses requires discipline and consistent effort. By following these tips, you can take control of your finances and work towards a more secure financial future. Please consider help when finding it difficult to manage your daily expense. Mindful planning will always lead to managed future.
