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I wanted to share this blog from so long but one or the other Important thing came up. Now finally I decided to share how I budget my monthly expenses.
Whether we are a student or homemaker or working women, Budgeting is important for everyone and we should give budgeting the required importance to have a stress free life. It doesn`t matter how much money we have or earn, We need planning to spend it wisely to avoid any financial crises.
Being a homemaker and a mother I can relate how we have to be on a budget to run our home. Instead of splurging money on everything we want, we like to save some money for our kids and ourselves. Every person has their own way of budgeting, similarly, I like to plan my monthly budget with an envelope budgeting system.
For me envelope budgeting system works great, I find it convenient and easy to manage thus I wanted to share how I use this system to manage my monthly expenses. It might help you guys 🙂
So without further ado, let`s get started 🙂
WHAT IS ENVELOPE BUDGETING SYSTEM
It is a popular financial system used by many households to better manage day-to-day expenses. In this system, one has to broadly categorise their monthly expenses say for example Grocery, Bread and Milk, Petrol/Travelling, Vegetables & fruits, Miscellaneous Expenses, Medical expenses etc.
Now the overall money intended to be used for all these categories added together is broken into pieces and then money is allocated for each individual category. And how do you go about doing this? Now here is what makes the complete process very interesting, yes you actually make envelopes for each category, write category name on top of it and put an amount in it at the start of the month.
Now when one has to go out for buying anything say for example milk and vegetables, money has to to be taken out from only those two envelopes and change if any is put back in the respective envelope. This way you spend money only on what it was planned for.
HOW I PLAN MY MONTHLY EXPENSES
So I divide my monthly expenses into two categories
- FIXED EXPENSES:- All the expenses which required Fixed amount every month. This can include rent, EMI, Policy, Mutual fund, Maid salary, bills etc
- VARIABLE EXPENSES:- All the expenses Where we have an idea about the approximate money required for a particular expense but that can vary depending on the current month situation. This can include Grocery, Electricity bill, Milk, Vegetables& fruits expenses Etc.
Now all the fixed expenses are directly debited from the account and for variable expenses I use envelope budgeting system. I categorise my variable expenses into 5 envelops that is for grocery, Milk and curd, miscellaneous, vegetables& fruits, weekly grocery. Apart from it one more envelope which I make is for my daughter`s expenses like diapers, wipes, body lotion toys etc.
Whatever amount left in each envelope at the month end, I put it in our savings. This way I am able to keep a track on my expenses and I know exactly where I have to be strict on spending. Try this method you will be amazed to see the small amount grow to a big number.
WHY I CHOSE ENVELOP BUDGETING SYSTEM
This gives you a better picture of your expenditure and brings you to the driver seat where you can take better control over monthly expenses. One can very easily identify any overspend done on a particular category by checking the amount of money left in envelope V/s the number of days left in the month.
If you feel things are running out of your hand, you can quickly shuffle your money and bring in more money to category which is most essential like food, from category which are least on the priority list like miscellaneous expenses/ dining Out.
It need not necessarily be a situation of crunch every-time, there can be days when you have managed your monthly expenses beautifully and when you look at money left v/s the days left in the month, you realise you have ample amount in your kitty. What next, gift yourself with a planned day out in such month, spend quality time with family, watch a movie, go shopping (Remember, you still need to be in budget :)) .
But remember to save a little each month as over the months you would be glad to see how the little-saved money looks like.
MAJOR ADVANTAGE OF ENVELOP BUDGETING SYSTEM
One can do a quick audit of their financial health for a month by just a peep into the envelope. If you know what amount you are left with as against the number of days left to spend it, you get in better position and are prepared to adjust to the situation rather than spending more at the start and being forced to be unable to even shell out money for essentials stuffs towards the end of the month.
My personal favourite reason to like this system is the use of physical currency. Yes, you heard it right in an ear of digital payment. As a rule of thumb, to handover 10K bundle to purchase a product makes you feel as if you have spent a lot on, but same 10K if digitally transferred makes a little less impact on your mind of having spent this amount. It is because of this awareness subconsciously created in our mind while using physical currency that we end up spending less and only on most essential things. Thus saving some money for future, great, isn’t it!!
So, This is how I like to plan my monthly budget. Let me know how you guys plan your monthly budget in the comment section. I hope you guys find it helpful and if you do please like, share and subscribe.
Thanks for reading