Here's a simple exercise to keep your household budget in shape :-
1. Average your Real income - also called Take-home salary - of last 3-6 months.
2. Average your Actual expenses of last 3-6 months.
3. Average your Actual savings of last 3-6 months.
4. Add 2 and 3.
5. Subtract 1 from 4.
6. If this figure is:-
a) Zero or near zero - your savings and expenses are manageable.
b) Positive - you have scope to save more.
c) Negative - you are living beyond your means.
7. For controlling monthly expenses, mark it in various heads as savings potential:-
a) Housing & utilities - 10-20% (through negotiations, energy saving, etc.)
b) Provisions & personal care - 20-30% (through bulk, smaller packs, online, etc.)
c) Education - 5-10% (in fees, transport, tuition, books, etc.)
d) Transportation - 10-15% (in fuel cost, rental, etc.)
e) Clothing & furnishing - 25-30% (in brands, gadgets, etc.)
f) Communication - 15-20% (in internet, etc.)
8. For adequate monthly saving, aim 10-15% of your Real income every month.
9. Invest your savings in a mix of equity and debt instruments, the best preference being an ELSS fund (for tax payers) and a Balanced fund (for others).
10. A change in spending priorities and the amount of current and future savings may become necessary after a few quarterly reviews after implementation.
1. Average your Real income - also called Take-home salary - of last 3-6 months.
2. Average your Actual expenses of last 3-6 months.
3. Average your Actual savings of last 3-6 months.
4. Add 2 and 3.
5. Subtract 1 from 4.
6. If this figure is:-
a) Zero or near zero - your savings and expenses are manageable.
b) Positive - you have scope to save more.
c) Negative - you are living beyond your means.
7. For controlling monthly expenses, mark it in various heads as savings potential:-
a) Housing & utilities - 10-20% (through negotiations, energy saving, etc.)
b) Provisions & personal care - 20-30% (through bulk, smaller packs, online, etc.)
c) Education - 5-10% (in fees, transport, tuition, books, etc.)
d) Transportation - 10-15% (in fuel cost, rental, etc.)
e) Clothing & furnishing - 25-30% (in brands, gadgets, etc.)
f) Communication - 15-20% (in internet, etc.)
8. For adequate monthly saving, aim 10-15% of your Real income every month.
9. Invest your savings in a mix of equity and debt instruments, the best preference being an ELSS fund (for tax payers) and a Balanced fund (for others).
10. A change in spending priorities and the amount of current and future savings may become necessary after a few quarterly reviews after implementation.