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How to create a workable budget that gives you extra money and life?

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Budgeting is the base for financial planning. Irrespective of its very strong construction, a building becomes weak if the foundation is weak. Success of the financial plan depends on the successful budgeting. You may belong to the society of hand to mouth existence; or you may belong to the affluent society, but budgeting is very crucial for your financial strength irrespective of your background.

Thiruvalluvar, a much celebrated Tamil poet emphasizes budgeting through his following verses:

Incomings may be scant; but yet, no failure there,
If in expenditure you rightly learn to spare. (Kural: 478)

Who prosperous lives and of enjoyment knows no bound,
His seeming wealth, departing, nowhere shall be found. (Kural: 479)

Most of us hesitate to make a budget because we think it is about cutting all the fun in life. Budgeting is not about cutting all the fun; it is about conscious allocation of funds. Once we start spending consciously, our mind will find out a whole new way of having fun within the budget.

Budgeting: A bird’s eye view

budgeting

A small leak can sink a great ship. A business will become weak, if its income and expenses are not under control. Similarly a family will be financially feeble, if its income and expenses are not under control. As most of us think, budgeting is not a complicated and tedious job. If one could break the whole budgeting process into a few small steps then budgeting becomes a very easy job.

First one should list down his income from various sources. Then he should track his expenses. After that, deduct the total expenses from your total income. If the result is a positive number, congratulations, you are spending lesser than what you are earning. If the result is a negative number, don’t worry. The idea of budgeting is to identify the loophole in our income and expenses pattern. Just doing a few small adjustments to your spending habits could help you improve your financial situation.

If you have not done budgeting so far, try it now. Once you complete the budgeting, you will feel more committed and more confident. It will give you lots of positive energy.

Making Budget: A step by step guide

There is ancient saying, “God is in the details”. Detail every bit of your cash flow financials while creating a budget.

1) Collect every financial statement:

It could be your utility bills, d’mat account statement, bank statement, ITR, Form 16A, Form 16, other investment receipts, etc. The idea is to make out the monthly average of income and expenditures. Therefore the more details you can get, the more relevant and accurate will the budget be.

2) List down all your income sources:

It is very easy for us to list out the income from employment or self employment. Normally we will lose track of income from investments, rental income and other miscellaneous income. Also check is there any annual income. Don’t forget to record the incomes received by way of cash equivalents like meal voucher and Credit card reward points.

3) Sorting out the expenses:

We can easily list out the major expenses. But listing down the miscellaneous and petty expenses would be difficult. This is where the collected financial statements would help. Don’t forget the annual expenses like car insurance and property tax. Once you have recorded all the expenses then split them into fixed expenses and variable expenses. This classification will provide much more clarity.

4) Savings or Over spending:

Now you have your total income as well as total expenses. Deduct the total expenses from the total income. You will know whether you are saving some money or doing over spending. If you are saving some money channelize that money into the priority areas such as clearing your Credit card outstanding or any other loan to become debt free or retirement savings or investing for children’s future plan . If you are on over spending, then you need to make some adjustments to your expenses.

5) Slightly change your spending pattern:

On your expenses list, pay close attention to the variable expenses. This is where you can cut short a few expenses. Each and every month we need to keep aside appropriate amount for the proportionate annual expenses. You can find out the reasons for over spending. Most of the cases it would be emotional buying or unplanned shopping. Once you have pointed out the reasons for overspending, then find out the steps or precautions to be taken to rectify the same.

6) Monthly Evaluation of budget:

Every month set aside an hour to compare the actual expenses with the budget expenses. If there is a negative deviation, find out the measures to control them.

Behavioural aspects of Budgeting:

Budgeting is not a onetime activity. It is a continuous process. Normally we start budgeting with a genuine motive. But after a few months it may get off-tracked like dieting or exercising. Therefore one needs to understand the behavioural aspects of budget .

1) Optimistic Approach:

Never focus on the negative aspects. Focus on the benefits of successful budgeting. What will you accomplish by creating budget. It could be becoming debt free, some money for vacation, planning for retirement. buying homes or children’s future plan .

2) Keep your enthusiasm alive:

Budgeting may over a period of time become routine and hence boring. Set a few short term goals like trying to repay the personal loan in 18 months instead of 36 months. If you achieve it reward yourself. Recognition could be a good motivating factor. Inform all your family members, friends, colleagues and well wishers about your progress on budget .

3) Realistic expectation:

One needs to keep realistic expectation on the outcome of the budget. Over expectation may demotivate you. Budgeting is not a magic. It is an art like singing and dancing. You will be able to progress it only over a period of time with constant practice. Now you have all the information needed to create your budget . So go ahead and create one for you and your family.

Happy budgeting.

Do you think creating a budget will take a step ahead in your finance life? What are your ways of creating a budget? Kindly share it with us in the comment box.

If you want to be successful with your budgeting and also in the next steps of financial planning, then I strongly recommend you to take advantage of

Budget

 

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Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
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Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
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Sridhar
8. September, 2021.
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Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
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30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
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Nellai B
26. June, 2021.
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