Making your very own personal budget

There may have been instances in your life where could have impulsively purchased the latest phone, or gone on a trip you could ill afford. What if you could make all these decisions without having to tolerate the condescending lectures from your upright and uptight guilty conscience?

Building your very own personal budget can make this possible. A personal budget is simply tracking your income and expenses to help you plan for your future.

Why is making a personal budget important?

A personal budget can be the tool to help you check your expenses, understand your goals, and help you achieve those goals with careful financial planning. Unless you have an unlimited source of money, (in which case - please send us the coordinates, bestie) you need to match your income and expenses.

Even if you have not yet sorted out life goals (aka boring adulting things) such as buying a home, or car, or retirement planning, you’ll be better placed if your expenses are lower than your income.

Making your own personal budget

Not going to lie- this part is dreadful. You voluntarily have to do the math, the same one you snoozed through at school. We have your back!

First, tabulate your expenses. Categorize the expenses into essential and non-essential expenses. As far as you can, reduce the non-essential expenses.

Second, let’s set up an emergency fund. Set aside an amount equal to 6 months' expenses. (FYI- your friends finally agreeing on a trip to Goa for New Year’s is NOT an emergency). You may invest it in a way that funds are readily available when you need them.

Next, list your short-term and long-term goals. It could be anything like going to Paris in 3 years, or buying your own house (This is not applicable to flats in Mumbai. We believe in setting realistic goals)

Fourth, get a feeling of comfort by making your savings work for you by investing it in various investment avenues. You can choose funds based on your financial goals, risk preference, and investment horizon. ( Pro-tip -Use these 3 big words in your friends’ presence and see how they come to you for stock tips)

You can align specific investments to certain goals-For eg- a tax saving fund could be linked to a long-term goal, while your emergency funds can be kept in cash. As far as you can, increase your investments consistently over the years.

No matter how small you start, take the first step. Save and invest to secure your financial future and achieve your dreams.

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