Thursday, October 13, 2011

3 Ways To Budget Your Expenses This Diwali :

It’s that time of the year again - the festive season has arrived and it’s time for celebration, family bonding, mouth watering sweetmeats, house organizing and decoration, new jewellery for your wife… the list is endless!

It’s at this time of the year that expenses can balloon.
You will most likely find the domestic help asking for Diwali bakshish, you will be spending on gifts and mithai, you will spend probably the largest amount on home renovation, if you’re going in for it this year. All these things can add up to a happy but also expensive month!

Whether you are salaried or a businessperson, there’s one thing that will help you manage your finances this month - a Diwali Budget.

Let’s get started.

1. Make a List
This one simple step will give you an overall picture of what your expenses will most likely be this month. Include items such as:

1. Gift & shopping expenses
This is probably going to be one of your 3 major expenses.
Make a specific list such as Rs. 1000 on dry fruits & mithai to Mr. X, Rs. 1,500 on saris to Mrs. Y, clothes, jewellery & other gifts for your parents, in-laws and spouse; crackers and presents for your children; personal gifts for your cousins and so on.

Also remember, good family memories often make for better gifts than presents which once used can be forgotten.

2. Salaries & bakshish
Try and be as detailed as memory allows - include the postman you’ve never seen before, courier agents, the milkman, the newspaperwala, the maid / servant, the building watchmen, and whoever else you think will ring the doorbell

3. Family gatherings
Estimate approximately how much you are likely to spend on dinners & lunches, whether for a party at home or an outing to a nice restaurant

4. Decorating / renovating the house
Whether it is a paint job, or new furniture, or renovating the bathroom or kitchen, this can often be a time of large expense on the home. This will of course be a family financial decision, so make a note of what the likely estimate is.

5. Vacation time
If you are planning a vacation, you should ideally book your rail / flight tickets as much in advance as possible.

This exercise will help you decide what items to put a ceiling on, and you will see if the overall expense is too high and therefore what items can be removed altogether or substituted for less expense ones. You can also club items and buy them wholesale, availing discounts where possible.

2. Don’t Swipe At Will. Track your Expenses.
There are 2 ways to use this rule.
1. The automatic reflex when out for Diwali shopping is to carry your credit / debit card, and swipe for whatever items are purchased, without checking each one and often without checking the bill either. Don’t do this! If possible, make a trip to the ATM first. Withdraw the amount you are willing to spend on a single shopping trip. That way, while you are shopping, you will automatically know you have used up the budget when you run out of cash in your wallet / bag! A strict rule, and one that works.

You should of course always keep your cards handy in this situation to avoid any potential inconvenience, but if you do use them, keep track of what you are spending on.

This rule works for some people, but not for others. It depends on your predisposition towards shopping. If you don’t always enjoy it, and are more of a ‘make a list, stick to the list’ sort of person, this will work for you. If not, then option b of this rule will work.

2. Use your credit / debit card judiciously, and track your expenses on your bank statement to see what has been spent and what’s left to be bought.

This is a slightly tricky one, as expenses can get away from you sometimes, especially if you are not following a list. Try and stick to using only one card, preferably one with a bank account that you have online immediate access to. When you get home from your shopping trip, you will be able to log in and check what your actual expenses have been, and compare with what your budgeted expenses were. If the first shopping trip gives you a bit of a rude shock, you’ll be more careful when you next step out.

At the end of the month, you’ll have a record of all your expenses on a single bank statement, which hopefully does not run into too many pages!

3. Avoid the Last Minute Rush
Last but not least - remember that haste makes waste.
Money can be saved if you plan your expenses in advance. Make a maximum of 3 shopping trips, take a list with you each time, tick items off the list one by one, and if possible, plan your driving / travelling route as well so you save time and fuel. Try and finish your Diwali shopping and gift wrapping one week before Diwali.

To sum it up, festivals are a time of celebration, family and joy. So enjoy yourself, spend time with your loved ones, and remember to manage your expenses!
Source : personalFN

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