The global economic downturn is not showing signs of going away. Recovery is there but at such a slow pace that it is almost invisible. In fact, even in high growth countries like China and India, the rate of growth had slowed down significantly. European economies are swinging like pendulums. North American and South American economies are progressing at snail’s pace. This leaves everyone, even those with assured careers, wonder about income, inflation, spiraling commodity prices and future prospects of savings and investments.
Unfortunately, most of know how to spend easily but never how to avoid spending. In fact, our spending and expenses appear to grow faster than income levels. Unless serious cutting of expenses is undertaken, the future of us and our entire family is at peril. Increase in incomes is not keeping pace with rise in expenses. This leaves all of us wondering where to start controlling expenses and manage monthly household income and expenditure budgets. The following tips on home budget management should prove useful to all our readers and those known to them.
1) List All Monthly Expenses
The first step in household budget management is to list all the expenses, dues, bills and outlays of each month and categorise them. The top of the list should contain the payments that we cannot avoid, such as utility bills like grocery bills, milk, vegetable and other food items expenses, electricity bill, water bill, insurance payments, home loan EMI/house rent, vehicle loan EMI, education expenses of children, conveyance expenses, etc. The next in the list should be provisions for unforeseen expenses and contingencies like sudden medical expenses, guest visits, etc. Third in the list should be the other expenses like entertainment expenses, eating out expenses, vacation expenses, etc.
It should be obvious from the above list that the third category of expenses is completely avoidable, unless you are flush with cash. Ask yourself an honest question. What do you gain by watching a movie with your family in the first week of its release, spending Rs. 500-600? What do you lose by watching the same from a DVD at home 2/3 months later, spending Rs. 50? Even the simplest individual should be aware that a Masala Dosa costs Rs. 50-80 in a decent restaurant and the cost of the same is only Rs. 5 at the maximum, if prepared at home. Can’t you and your family members put in some effort to make the same Masala Dosas in your house on a Sunday when everyone is at home? Your one-day eating out bill will be the same as the cost of preparing the same food items for 4-5 Sundays in your house.
2) Check Prices Online before Shopping
At present, prices of nearly all food items are available online on daily basis. You can check prices of rice, wheat, vegetables, fruits, meat and poultry, etc. in various online websites daily or at least before you go on shopping for these items. Further, prices of vegetables, fruits, meat and poultry are usually high in the morning but taper off as the day passes, reaching the lowest in late evening. Similarly, prices are always lower during the last week of the month, compared to the first week.
These are the ideal times to make purchases and you are likely to gain between 20% and 50% on prices of the above items by such purchase. For other household items like toiletries, coffee/tea and other groceries, you should keep looking out for discount offers, clearance sales, etc. to obtain lower prices. You can even think of online purchases, since most online merchants offer considerable discounts and cash-back offers for online purchases. Even if you save 10% of your average monthly expenses on these items by this type of approach, that is a substantial saving. In fact, you will be surprised how much you can save if you spend an hour a day or 3-4 hours a week on this.
3) Surrender Your Credit Cards except One
Credit card purchases are among the costliest purchase options. In fact, many leading economists attribute the present sad economic situation prevailing in the United States to proliferation of credit cards and their indiscriminate use. It is an established fact that many individuals and families had landed in serious financial mess by using credit cards for all kinds of purchases. This easy shopping enticement makes even tough and hardened buyers to purchase totally unnecessary items. Either switch over to the habit of cash purchases at all times or keep your credit card purchases within a limit that you can pay and clear every month. Anything over and above this limit is inviting disaster. Keep only the one credit card that offers lowest interest and least in terms of other fees and charges. Surrender all other credit cards without any compunction.
4) Reduce All Wasteful Expenditure
If more than one person in your colony is traveling to the same areas in the city for work, you can pool the two-wheelers or four-wheelers and use one common vehicle. If needed, you people can use one vehicle one day and the other one the next day and so on, to even out the maintenance costs. This way, you will not only be serving the country and yourself a great favor by saving on petrol/diesel bills but also on clean environmental aspect, since lesser number of vehicles on the road means lower atmospheric pollution.
5) Augment Your Income with Additional Income Steams
The arrival of the Internet had opened a huge window of opportunities to earn extra income by spending a few hours every day. You can indulge in Internet marketing of your own home-made products or the products of others as reseller or affiliate. Even selling your handicraft like woodwork, metalwork, etc. through word-of-mouth in your neighborhood will assure significant extra regular income every month. If you analyze your talents, you can always come up with something that you can do in your spare time that is capable of generating substantial money.
Any extra cash generation is only going to help you in either meeting ballooning expenses or in augmenting your savings. Managing your monthly budget is not just about reducing or cutting expenses but also about increasing your income streams. When you work on both sides of the balance sheet, your net worth improves dramatically. If you have any further questions on this essential and indispensable subject in the present tough economic conditions prevailing everywhere, kindly feel free to contact us. We will give guidance and suggestions to help you implement a strong budget management programme in your household.