Remember the day when you got your paycheck and you will be like I have so much money that I can buy anything and party all night. Suddenly you realized that you have left with nothing and whole month is still to be survived till next pay comes. I have been like these for several years and I wanted to change my spending habit. So I researched and found few Ideas how you can manage your money in systematic ways.
Budgeting your money is the easiest way to manage expenses. The basic 50/30/20 rule where you divide your after tax income into three component 50% into needs, 30% into wants and 20% into saving. But what I found is that this method is not justifying all the expenses that generally occur in our day to day life. So what I will suggest is to do ‘Advance budgeting’ to manage your money in most new way where you will not compromise on anything and you will not be worrying about money again.
Here are the different components of ‘Advance Budgeting’:
Rent and utilities (35%)
This covers all the basic needs a person required on day to day basis. We can consider Grocery, house rent, transportation, Internet and all daily needs.
Shopping and entertainment (15%)
As our generation like to go out and enjoy our life, this will suffice that need of going out for party, shopping, movies and what not
Taxes and Debt repayment (25%)
This is amount which no one wants to give but if you have any house loan or personal loan, you can target that with this amount. Everyone use credit card now a days, so repayment of credit card bills will be don’t with this amount. Also, if you have any taxes that need to be deposited to the government, this amount can be used.
Investment and savings (20%)
This is the most important portion which needs to be saved for better future. You can invest in Mutual funds, saving accounts, Equities and other investment products.
This is where all your others expenses should be link to. If you have birthday and you have to throw a birthday party, you can use this money for such purposes or to give a gift to your loved ones. Also, if you want to travel then you can save money and use it for that. This is also can be use in case of an emergency .
If you manage your money like this, you will never need to worry about your expenses as well as saving.
Tell us what you think about the technique and do share.