Budgeting is the cornerstone of financial stability and success. It is not just about monitoring expenses; it helps you live within your means and work toward your financial goals. Whether you aim to pay off a debt, save for big spending, or create wealth, budgeting is the first step in achieving your goals.

At its core, monthly budgeting is all about awareness and intentions. It shows you where your money is going and helps monitor your spending. Understanding your monthly income and expenditures will help you make informed decisions and avoid pitfalls. For beginners, this is the initial step to managing their finances. Mature adults can use this to get the most from their resources.

This article aims to guide you as a beginner, to create a simple budget and introduce some helpful tools and apps.

Long-term planning, consistent savings, and awareness of diverse investment instruments are key to achieving your goals. Let’s examine the basic steps to creating a budget.

Steps to create a simple monthly budget

1. Write all your essential expenses. Include groceries, basic monthly bills, EMIs, credit card payments, payments to house help, school fees, and other regular monthly expenses. This list will give you an idea of the expenditures that you can expect.
2. After you track your expenses, divide your income into three parts: needs/wants/savings, or the 50/30/20 rule. Allocate 50% of your salary to your regular monthly expenses, already listed. Shopping, fun, and leisure activities account for 30%. Allocate 20% to savings.
3. The savings can be any of your choice. It can be a recurring deposit or a purchase of EFT gold. Depending on your risk appetite and age, there are many options to choose from.
4. Start small. Building a large corpus gradually is wiser than trying to get rich quickly. Make sure you do not put too much into savings and capsize the budget. The 30% allocated to fun is as important as the savings. A proper allocation of funds will keep you comfortable and help you achieve your targets in the long run.

Having mastered the basics, let’s study some helpful budgeting apps and money management tools. When choosing a tool, make sure it is user-friendly. Evaluate the pros and cons of the app before diving into it. There are many good budgeting apps, but you must choose the one that suits your needs.

Some online budgeting tools.

Some popular budgeting apps include Good Budget, Walnut, Money View, and ET Money. Among these, Money View stands out as one of the best budgeting apps in India.

Features include Real-time tracking of income and expenses.

User-friendly application.

It assists you in creating a budgeting plan by analyzing your spending trends. It also provides a reminder service for bill payments.

Good budget

Pros: It uses the envelope system.

• Ten envelopes are free; additional envelopes will incur a charge. There is also a free app available.
• This app is beneficial for couples to manage their expenses together or save for a significant goal.

Cons: Your bank account remains unlinked. Expenses have to be entered manually.

• Some features are unavailable in the web and operating system versions.

Wallet

• Pros: A helpful app for married couples to plan their month together by tracking income and expenses, and coordinating their accounts.
• Cons: The free version is tedious, as it requires manual operation. To access all features, an upgrade to the paid version is necessary.

ET Money

• Pros: It is available in eight languages and features a user-friendly design. The system provides voice search functionality and is free to use. It delivers a comprehensive solution for all banking needs, including disbursements and goal-oriented savings. It includes an automatic feature for transferring bill payments.
• Cons: The app offers a limited selection of investment opportunities. Some of its features come with a charge.

Multiple budgeting apps and expense management systems are available for you to explore. However, it is essential to check the security features of any app before using it. It is advisable to avoid connecting the app to your bank account.

If you are uncomfortable with online tracking of income and expenses, the simple pen-and-paper method or an Excel sheet is a safer and better alternative.

Budget development and app investigation form only one part of the process. The main is to stick to whatever budget you have made. The concept of expense monitoring requires an adjustment period. Gradually, over time, this develops into an automatic habit. These tips will help you stay on track with your plan.

Some Budgeting tips.

1. Keep track of your spending, even little bits like the coffee and snacks at the office.
2. Set up an automatic transfer to a separate account to prioritise savings.
3. Set aside some liquid cash to budget for variable expenses like gifts, car maintenance, and health emergencies. Building an emergency fund is as important as regular savings.
4. Use cash for non-essential spending.
5. Reduce food expenses by cooking at home and avoiding take-outs.
6. Avoid using credit cards unless it is very essential.
7. Reward yourself at the end of the month if you have succeeded. This will encourage you to continue for the next month.

Consistency and discipline are the only ways to achieve our financial goals. A budget is not a restriction or binding. The perceived limitation on spending leads us to think of it as such. The process removes us from our comfort zone, promoting structured thought. It provides us with financial freedom.

I have a special interest in painting and have always wanted to purchase professional-grade paints. I delayed the purchase because other expenses were my priority, and I wanted to see what funds remained afterwards. With a budget underway, my confidence grew, allowing me to pursue my interests with leftover cash.

Budgeting, as this shows, requires collaboration between both spouses. Budget adherence, like other responsibilities, is a team effort, not a solo task.

Regardless of marital status, this formula will help you succeed. Let us explore the financial path of an average man to understand how to achieve economic success.

Arjun (name changed) comes from an ordinary middle-class family. His mother, a single parent, struggled with finances to raise and educate her two children, Arjun, and his sister, Anu. Arjun completed his MCA and joined an IT company at age 26. Let us study his financial journey till he reaches 35 years.

Case Study: Financial success of Arjun Mehta.

• Subject: Arjun Mehta
• Age: 35 years
• Profession: Senior Systems Programmer.
• Financial Goal: Accumulate sizable savings to help and support his family and healthy personal finances.

Background

Arjun began his career with a starting salary of Rs.6,00,000 per annum. He witnessed financial hardships in his formative years. This motivated him to adopt disciplined financial habits, and he started budgeting his salary from the very first month.

Strategies employed

1. A friend of his in the financial sector taught him the 50/30/20 rule. With a little tweaking, he adapted the program to suit his needs.

Household expenses consumed 40%, which came to approximately Rs.20,000

He allocated 20% for travel and fun.

Rs.20,000, equivalent to 40% of the salary, went into various savings instruments.

2. He took decisive action to create an emergency fund, ensuring that he was financially secure in the face of unexpected emergencies. He set up an automatic deduction of 10,000 rupees from his savings. Arjun intended to save Rs. 8,00,000 to ensure his and his sister’s weddings took place seamlessly.

3. Systematic Investment Plan (SIP)

He started investing in mutual funds with just Rs.5000/ per month. As his salary increased, he increased the contribution to Rs. 20,000/-

4. Maximize tax savings.

Arjun aimed to maximize his tax savings, ensuring he kept more of his hard-earned money.

He started by purchasing a life insurance policy worth Rs. 1 crore.

He opened a PPF account and put money aside in the NPF besides the mandatory PF deductions and ELS.

All this gave him benefits under Section 80C of income tax laws.

He purchased health insurance for his mother and benefited under Section 80D.

Financial goals achieved at age 35

Arjun possessed a net worth of Rs. 1 crore.

His emergency fund has a healthy balance of Rs.8,00,000 after he financed his and his sister’s wedding.

He arranged cashless knee replacement surgery for his mother using his purchased medical insurance.

For a 2BHK house, he could afford a down payment of Rs.2,00,000.

Through his investments, he earned a passive income of Rs. 1,20,000/.

Financial control starts today.

The best time to start proper financial planning is today. Early initiation offers the benefit of compounding; you will rapidly see results from your efforts. Budgeting is the essential first step for achieving financial stability. With this knowledge, you can make informed decisions, cut unnecessary expenses, and accomplish your financial goals. Start saving by keeping track of your spending; consider using an app for support.

An early start provides a considerable edge. Start your journey toward a financially stress-free life now.

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References:

• Onefpa.org
• https://moneyview.in
• https://www.llfi.com
• www.godigit.com