Well planned budget eases financial breathing

A well financial budget eases financial breathing.

Its not the Rs. 3000 IPod or the trip to Ooty makes difference each month. The expenditures which are unnoticed often make a lot of different. Until lately, I didn't realize that a Rs.2.00 tea at the tea stall thrice a day would make it a surprising Rs.180/month. This is what actually counts and keeps spoiling the dish each month and month by month.

One of my; rather 'un-necessary' spending were - a lunch each day at cafeteria. Though this wouldn't cost me any more than 35 - 40 each day; but it totals to a whooping Rs. 1000 - 1200 per month. Now this counts a lot and am sure is making my money slip from my purse.

How do I save it. What do I do. I kept wondering.

Later I've read a post, rather suggestion by Richard Jenkins at MSN Money. Richard believes in a 60-10-10-10-10 solution. He is of an opinion of dividing monthly gross income as follows.

• 60% -- committed expenses.


• 10% -- irregular expenses.


• 10% -- long term savings / debts


• 10% -- fun money


• 10% -- retirement.

Jenkins believe the best tweak would be to cut down committed expenses.

A beautiful article on How to save enough money, age no bar by Veena Venugopal with Kayezad E. Adajania. I have recomended this article to several friends of mine.

Venugopal, in this article highlites three different types of people when it comes to saving money. He believes what he calls

• Early Birds


• Late Bloomers


• Final Chargers

Early Birds according to Venugopal are people who start savings from the age of 25. He advices Early Birds to start saving 10% of (post-tax) income till the age of 30. Then step up to 20% (from 31 - 40) and 30% (from 41 - 50) and finally 50% in age of 50's till retirement.

This sounds good; but how many of us would be able to achieve this. Starting to save at the age of 25 sometimes itself seems challenging.

Late Bloomers are adviced to start their savings one step forward -- from 30% (30-40) and 40% (age of 41 to 50) and finally 50% when they are 50+.

Final chargers could still have some chance of 40% in 40's and then 50% in 50's.

The key to start saving early is compounding.

Similarly, having a decent and workable budget helps us to achieve savings goals when we're left out of money at the end of the month.

For me, I have different categories for budget. Food, Bills, Gifts given, Transport, Loans etc. Each category is been allotted a specified amount and then a seperate envelop for better understanding of what's left out. Each time I go out to the departmental stores, I know I have groceries on the list and so my 'food' envelop sheds money. Next time I know how much i'm left out with.

Maintaining a seperate envelop for different categories sounds more of a added work. But don't worry. I have a better solution which I started since 2003. coming up in my next blog post.

A Budget need not be a complicated one. Inface the simple it is; the better it is. I would suggest, as I had started categorising my expenditure into three majour categories.

• Essential / Mandatory
• Discretionary (that can be reduced).
• Avoidable.

All Bills would come under essential or commitments like Loan EMI payments, Life insurance premiums to be paid, Income Tax are some of the Mandatory expenditures.

Discretionary would actually be expenditure category which I have to spend; but can actually or dramatically reduce my spending on. The more items in these category the more chance to reduce costs. Like a transportation for me would be discretionary. Similarly Groceries, Fuel charges, Services, House hold supplies are all reducible.

Avoidable are items which I can totally avoid. Like an additional magazine I purchase each month. Dining out. Extra purchases. Its not these extra purchases which make the difference. After all its good for a change we treat ourselves with such luxuries. But problem actually arises when we these luxuries are taken on credit and ultimately we get items which we need to pay in future. Now this is when a luxury become a liability.

Pritty bank

I call it Pritty bank.

We wonder how would we be able to save when we have loads of resposibilities, expected and unexpected expenditures. Some times it seems tough when we put all this together.

Well, the key is.. a Pritty Bank for your 'Expected expenditures'. Now what is this.. its an envelop I have in my living room. the cover of it has a picture of thing i desire to purchase. Its there in my desk (locked). Every day I come back from office, I donate myself for my desires ( Indeed its good specially when we're paid for all the hard work we do at office; daily).

Now the moment this amount reaches 2000/-. I save it in a bank for a target I have .. say 20k.

Its easy when things are enveloped. This is an old money management system quiet often talked about on different blogs and posts I've read. One of which I'd like to share. It talks about the same thing, in a different context all-together. There's a post by Lynn Brem, who talks about a good concept at Take Back your brain. All it talks about are methods of using Marketing strategies as a boost to pursude us to save.

We have always in someway or the other exposed to Marketing strategies. There are advertisements, posters, blog ads, online ads, emails etc which keep us informed or I prefer saying exposed to new items and gadgets. Seldom what we actually realize is it actually introduces a new idea for us. I am sure we have all seen Airtel's adds. The strategy used is simple, it reflects our day-to-day working. where we forget to maybe pay our bills and there we are; advised to pay the bill directly from the phone itself. Now there are two things we need to grasp. One is that we need to pay the bill and so; another option of doing the same. And another; the add repeats itself after every, say 20 mins. Now what! its not a reminder; Its a marketing technique which is used. Repeated visualization of images which would help our brain to learn the whole add. Un-noticingly we start visualizing this even when out or at office.

Now this visualization technique can be well easily used for our so called 'Personal Marketing'. How.. I'll try to put it way simple to understand.

Lets try this. You wanted a new HONDA CITY! Wooh! I'd surely like to have one. Maybe not right now but surely later. Now how do I help myself reach this goal? Simple. The old envelop system. All I need to do is the following.

• Designate an envelop for 'Honda City' (or whatever your dream/aim is).
• Find a beautiful picture of your dream (Honda) and paste it on the cover of envelop.
• I'd add it by adding my own picture and pasting it on the car's picture giving it a visualization of me owing it.
• Now All I do is designate a daily/weekly/monthly amount and accumulate it in the envelop.
• Sure Its not going to be enough for a Honda city. So I choose to sweep in the cash to my back accoun once the amount reaches a specific target.

Great!! There I go. Its that simple.

Take back your brain gives you wonderful ideas of advertising or marketing to yourself like the envelope ad just discribed. It also answeres to queries of people who may ask for better or more personal ideas of teaching oneself.

Honey!! where's my money !!?!!

This was my first question when I'd seen myself in a financial mess.
OfCoz! I knew there was nothing to be worried about, but it wasn't so easy either. My bank savings got eroded quicker than I thought. My pocket seemed getting empty too quickly and I'd find myself running to the ATM for getting more liquidity.All seemed going on the way it was ought to. But end of the day I always used to ask myself "where's my money going?".

Now was the time for myself to set and get prepared for a great financial turn. Or should I call it an operational turn (not exactly a financial one). I started seeking advices online. Many, I never understood. often I heard the terms 'saving', 'invetment', 'leveraging' and 'goals', 'emergencies' etc. So I had decided to get more help of 'HOW?' rather than 'What?'. This quest of saving money had found myself reading several blogs, many websites and posts, problems and solutions to different people world wide with different financial problems. But I always used to search myself and 'my problems' in them. It was difficult though.. But eventually i have learnt a few things about PERSONAL FINANCES MANAGEMENT.

Sounds too personal, yeah! it is. But what I really wanted to know is where is my money going? It was my first and the most important FACTOR in my 'Personal finace management'.

Now was a high time I needed to know the outflow of my money. So, started maintaining a small diary. I used to note down everything I spend in that diary. But end of the month, there was too many pages written and I could not make a gist of it at all. Then I started designating pages for the next month. Something like 'Daily Living', 'Food', 'Bills', 'Clothes', 'Transport'. Now that seems a little good. All i did was enter the date and amount in the appropriate page and total it up in the month end. It was then, I got a broader picture of whats actually going on with my finances.

It gave me an Idea. I have seen my spending habits and came to know that I spend say Rs.2000/- on dining out each month. or Rs.1800/- to fuel up my car. So I started keeping money exclusively for a purpose in my purse. Say I would keep 1700/- in one place and rubber-band it to know that its for dining out. So whenever I go out for dining, I would just open the envolope and see how much is left for the month.

It did help. So the first thing to a successfull 'Personal Finance Management' is the Envolope system. Go ahead, try it.. I'm sure it would be helpful in a way or two.

Comments are welcome.

Welcome~2~Way~2~b~Rich

Welcome friends!

I have always had this dream to become $rIcH$. But how? when I was a kid, someone told me save every penny. I did, until i have 20 to 30 bucks for a pizza or yummy haleem; I would already spend it. Later I realized maybe I should start saving in an Savings bank account. I did, it started to work. I had almost about a 15 - 20k in my account. Then I got attacted to the wonderful world of Investments. (Equity: shares). I thought the best way to double my money would be through shares. I heard people posing they've earned double of what they have invested in amost a few days - a few weeks. Now that was something which I knew i was looking for.

Time passed, in my quest of doubling the money, I always used to invest on a intra-day basis (Day trading). And worst of all, I had this new trick of playing SHORT. Not knowing that short on an intra-day basis is considered a highest risk investment strategy. But as its said, there are always two good thing about past.

• It fades away...


• There is always something to learn from it...

Now, the very intention of writing/maintaining this blog is to help or educate or guide guests (readers) to a better - hard way learnt methods of making/saving money.

Watch out this blog, if you are new to investing or would like to get some real-life savings tips. Maybe you'd be one like me wanting to become rich - slowly.