It sounds cool; you have created a monthly budget!
Creating a monthly budget is the first step to taking charge of your money and managing it wisely. However, not everyone follows it consistently and hence ends up creating a budget after 2-3 months. Rigorously following your budget is the secret to creating enough funds for the future.
There are situations when you borrow money as a personal or instant loan. However, by properly budgeting your income and regulating your expenses, you can maintain an emergency fund that can be used in any emergency.
So, what it takes to follow your budget? Below are some points that will help you follow the budget strictly.
No More Big Purchases: A big purchase can significantly change your budget. Whether you are buying a new car or motorcycle, it will require a significant portion of your budget (as EMI). The quantity of your big purchase will matter if you focus more on saving than unnecessary expenses.
Before adding any big purchase to your monthly budget, check whether the purchase is worth investing in. If it doesn’t solve your urgent needs, you can skip such expenses and save that amount for the future.
Restrict Your Spending Power to Your Income: Obviously, you would find products, items, and gadgets that force you to make additional expenses above your threshold limit. But such practices are never a great idea as they increase your debt count and create financial burdens in the coming months.
Create a budget and keep the spending limit in mind. This will help you make expenses below your limit and help you follow your budget plan wisely.
Focus on Low Credit Card Limit: Banks always appreciate increasing your credit card limit as it encourages you to spend more. Hence, you should keep your credit card limit low, which gives you the mental freedom to spend less. With a low credit limit, you will be bounded to keep your expenses within the credit range, eliminating the hassle of unnecessary expenses using your cred card.
Follow Budgeting ZERO Concept: Budgeting zero means you prepare a budget where the final amount left will be zero. It means the income minus your expenses and saving will result in zero. Once you prepare such a budget, finding additional amounts for your unwanted expenses will be tough.
You should, however, allocate some amount to your emergency fund that will keep your future safe in case of any emergency.
Pause Auto-Subscriptions: Nowadays, you have numerous apps and services that include a monthly subscription. You make a one-time payment and select the option for auto-renewal. Every month, the specified amount is deducted from your bank, even when you are not using the application/services.
You should avoid the auto-renewal option for any such subscriptions that can help you save a small amount for the future.
Here you should not include the monthly payment of health insurance, EMI, or term insurance, as they must have an auto-payment option to safeguard your life.