How To Save Money
Hello! Hi, Welcome. We will learn about personal finance in this article. What is personal finance? We usually called personal finance for all our personal financial affairs. Like What is our Income, what are our expenditures? How much we save? How much we spend? What is the budget? How much we have for a contingency plan? What are our investments? These all financial affairs. Which is personal. These all come under "Personal Finance". So Personal Finance is a Very Important Topic.
As we usually witness at the end of every month, our all income is exhausted we running Especially this is a widespread problem among the salaried Persons. As Their Salary Credited into account Within a week or two weeks, Our Whole salary has been spent. And at the end of the month, We again Need to borrow money from our family and friends. So Why this happen actually? Behind this, a dire mistake, which we called Money Mis-Management, is a great cause of restraining us from saving.
Today we will address this problem. And will learn about a technique. Help To enhance our Saving after saving on how to protect against Inflation Inflation is Also a critical Topic in future. Please drop a comment if you want to know about it? So We will learn about these all problems in this article.
Rat Race
We will also learn a technique to How to enhance our Saving. How to manage our Investments How to get out from "Rat Race" As we get the salary we feel perfect, But at the end of the month we again broke this is called the "Rat Race". We always run in the same circle we earn and spend; so, How do we exit this "rat race"? We will learn this technique. So Without a delay, let's get to the Topic. First! When we receive our income, Any Income, whether it's a salary income or Business income, when we receive our income So First. Categories the income. That How I'll spend this income? Suppose! I've 1L Income. So now I'm going to spend this 1L first category, Your Expenditure.
We have three kinds of expenditures. FIrst over our Needs second Over our wants And what left after these expenditures is Saving Need expenditure are those spends which are inevitable. Like medicine, Education Food Cloths are inevitable Expenditures. If You have a rented House, you Must pay rent. So all kinds of unavoidable expenditures are under need Expenditures, So our Second expenditure is Want Expenditure. Wants expenditures are those expenditures that are not necessary, But we want to do that. Suppose! after getting the salary you go out to any restaurant for Dinner. We don't need it we go on trips Go To the movies if we like any Mobile phone we go and buy them. We spend unnecessary things to please ourselves. So we spend some money over to satisfy selves What left after these expenses Is our "Saving" So we spend our Income in these Categories "Need Expenditures" "Want Expenditures" And "Savings."
So first! We Need to divide Our Expenditures and figure out these expenditures Belong to which categories. We can track our Expencess Make a Budget We can Download Mobile applications to Monitor Our Expenses Once we categories our expenses This is the very crucial part we need to allocate our income in three-part 50% 30%, 20% Formula widely used 50%, 30%, 20% We need to divide income in three Part Suppose! You have 1L income Divide it into three parts 50K, 30K, and 20K. The maximum Upper cap For Want is 30% at least 20% of your income. You Should Save.
How to Plan Monthly Budget
The first important thing before creating a budget is to decide whether you want to do it manually, on excel or with the help of apps. As far as I am concerned, I am still in ancient school and prefer pen and paper. So the first step is to calculate your monthly salary: the salary you get after deducting taxes... It includes things like rent, interest on deposits, dividends, any side business. If your salary is inconsistent, take an average of your last three months income. Suppose we have calculated our salary to be 5000$ Step 2 is to write down all your fixed expenses. Things like Mortgage, EMI, Utilities, Student loans, Insurance etc. It's always good to be more inclusive at this stage. Take into account every little amount that you spend on fixed expenses.
So after calculation, this number comes out to be 2000. Step 3 is most important. You need to write down your financial goals, e.g., retirement account, Debt-free, travelling, down payment. Suppose that figure comes out to be 600$. Step 4 is to write your variable expenses. Each family is different as far as variable expenses are concerned... Examples of variable expenses are kids activities, entertainment, clothing, dining out, personal care etc. Everyone has different priorities as far as the variable expense is concerned. If I see my list, Kids activities will be at the top of my list. Suppose this total now comes to be 700$. Now you have to find ways to minimize it and save. My apologies; I mean to subtract all your expenses from your income. If this number comes out to be positive, congratulations, you are saving money. Still, if this is negative, you have to look back and see where you can reduce your variable expenses and create extra income sources. Personally, I consider it an unwise choice if you have nothing in your emergency fund and still you are going on vacation 2. Important pointers from my own experience Whenever you are buying a house and getting a mortgage: always plan long term. Think if one of you lose a job, you will still have enough to pay for it smoothly Second important thing. I have seen in many Indian families that the ladies run the house very efficiently, but they are not aware of investments, taxes, etc. Women need to know everything about financial planning, goals, investments. I enjoy it a lot when I write on unusual topics... Please keep suggesting