Does the word 'budgeting' bring a frown on your face? Well...you're not alone. Most individuals dread it. Who'd like to put off buying something oh-so-irresistible today thinking about the unpredictable distant tomorrow?
But then there are quite a few who make an effort towards budgeting their finances. The sad part is it does not last for long. Some do a half-hearted attempt that serves no real purpose. And still others start enthusiastically but within a few months are back to square one. While some don't even start.
Howsoever dull budgeting may be, the end-result can be very rewarding. Here's what a good budget can do for you:
So if you're really keen on budgeting your finances here's letting out seven secrets to make it cool and enjoyable.
Secret 1: Make it a family affair
You, your spouse and your kids are all an integral part of the budget. Therefore, there is no reason why as a money-earner, only you should be making the budget, which the others have to follow.
Your family members also have desires. If you do not involve them in budgeting and make it inclusive, they may not appreciate the whole process. Also, they may not understand whether something is affordable or not and may lead to an unnecessary friction.
Once everyone is involved in budgeting, it does not remain just a job to be completed. There's more committment to it.
Secret 2: Have targets
Planning to buy the latest mobile phone on offer? Refrain from using your credit card or opt for equated monthly installments payments. This is the easy way out and can upset your budgets of the coming months leading you to pay up heavy interest charges.
Instead, keep aside some amount from your budget for the next five to six months and buy the mobile phone out of the money you saved.
That's the way to approach budgeting. Build in interesting targets, rather than making it just an exercise of adding up your incomes and expenses. Make budgets something to look forward to with expectation. If your goal for this month is a mobile phone, next one can be plans for a playstation. An iPod can come later and so on.
Secret 3: Surprise yourself
Don't make budgeting a predictable affair. Try to bring in some novelty factor to it. For example, you do not have to always do your budgeting on the dinner table or the living room. Maybe you can go on a picnic and do your budgets there. The whole mindset is different, when you are out on a picnic. As such you will enjoy it more. Or may be once in a while you could ask your kids to work out a budget.
Secret 4: Dare to do more
There will always be times in your life, when you are running short of cash. Instead of getting worried or resorting to borrowing, dare to do more. Think of how you can save more money. No expenses are fixed. If you think divergently, you can always finds ways to spend less, without cutting down on any item.
Think how you can earn more money. Perhaps, you could take-up a part-time job in the evenings or weekends to supplement your main income. There are quite a few avenues for moonlighting.
Challenges bring excitement to budgeting. And when you achieve success in your ventures, the feeling it brings along with is simply great.
Secret 5: Think beyond money
This may at first, sound contradictory as budgeting is all about managing your money efficiently. But that is the moot point. No one needs money just to increase one's bank balance. Ultimately you need money to buy things you desire - a new car, a new house, a new dress, diamond jewellery, vacation in foreign locales among others.
Therefore, think what you 'value' before you commit to any purchase, rather than trying to imitate your neighbours. Change your perception and think from 'materialistic' to 'meaningful'. Not only will this bring more peace and contentment to you, but will also improve your relations with your family members and society at large.
Secret 6: It is not a test of your mathematical skills
One of the main reasons why budgets become boring is because we try to work to the last paise. Keep in mind that you are not appearing for some test, where you will get marks for the 100 per cent correct answer.
The idea of the budget is to broadly plan for living within your means. A few hundreds spent here or there is not going to make any significant difference to your budget. But trying to account for every penny can become mentally very taxing leading to you and your family losing all interest in budgeting.
Secret 7: Don't be too rigid
And last but not the least, be open-minded and flexible with your budgets. As mentioned in the beginning, budgets are not meant to 'tie' you down. It is like flying a kite. The purpose of the thread is not to prevent the kite from flying, but to make the kite fly with direction and within certain limits. Without the thread the kite cannot fly far, fly high or fly for too long.
Budgets give you a defined economic freedom. It is not a financial restriction.
So let's get going. Let's get started with making our budgets and make budgeting a fun-filled and challenging exercise. Let this be one New Year resolution, you will never break.
The author, Sanjay Matai, is an investment advisor and can be reached at sanjay.matai@moneycontrol.com
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