Intending to effectively manage monthly expenses? Follow these tips
There's often a temptation to splurge our money at the beginning of every month only to crib and save every penny until the month ends. If you find yourself in this situation, a carefully planned budget could be the right solution for you. Read on for a few effective tips to help you find the right financial balance every month.
Making a budget is key: Boring exercise but extremely important
This could sound boring and a bit exhausting but making a budget is the first step toward planning your monthly expenses. It is best to get started by making a hard copy of your budget. Note down your income and bills and calculate your net income. Make a list of your expected expenditure for the month. Track your actual spending against what you budgeted.
Stop impulsive purchases and think before spending
It is often tempting to buy that pretty dress online or to stock on new tubs of ice cream when you already have them at home. The next time you have such thoughts, stop yourself from making the purchase and plan it for some other time. Chances are you will totally forget about it and won't make the purchase at all, saving some pennies.
Limit debts by following the rule of thumb
Follow the rule of thumb where your monthly debt payments should not exceed 20% of your take-home pay. Make immediate payments and limit the usage of credit cards. Make it a habit to pay your entire credit card bills as and when you get them. Paying the minimum bill amount and purchasing more items means that you're spending more money than what you have.
Go for alternative ways rather than spending money carelessly
Do not spend money unless and until it is absolutely necessary. Look for a few alternative methods to spending money in bulk. This means renting books at the library instead of buying them. Spend a night savoring your comfort food rather than ordering a takeaway. You will notice that such simple tweaks will help you save a lot of money by the month-end.
Create a spreadsheet, monitor your income and expenses regularly
Note down all your expenses and keep a detailed account of your expenditure. You will be surprised at how small bills add up to your monthly spending. You can also create a spreadsheet to categorize and track the expenses. This will give you a clearer idea of what really is costing you and allow you to start making more mindful spending.