Personal Finance

1101

Financial resolutions for the young and thrifty

08 Apr, 2015

Most of the sprightly 20- something individuals must be associating themselves with the situation of struggling to save, managing expenses and take care of mountains of debt that keep piling.

Here are some time-tested tips to deal with this state of affairs.

Prepare budget.

Plan a budget which is sensible and doable that clearly outlines expenses and savings under various heads like rent, grocery, any saving scheme, vacation etc. Be as detailed as possible while categorizing and this will in turn help you in plugging loopholes, if any.

If unmarried and not having any financial responsibility other than to take care of yourself, it is advisable to save anywhere between 20-30 % of the income. Greater you save now, bigger is the corpus accumulated by the time you plan on getting married or taking up the responsibility of your parents or other family members.

Make an allowance for exigency expenses

Always make an allowance for exigency funds (about 4-5 % of your monthly income). This corpus, over time, will take care of funds in terms of emergency and will not affect your regular income.

Avoid the temptation of a discount sale.

After a shopping spree during an on-going sale, we feel that we have saved a lot of money by buying things at cheaper cost. This is not certainly true .Sometimes we end up buying unnecessary things only because it is cheaper than the market price and in turn the total expenditure is  more than required.

Use technology to your advantage.

There are many free apps that are available in the market like MoneyLover which help you to create a budget and monitor your expenses, savings and investments on a regular basis.

Reduce the limit on your credit card & hide all those extra credit cards.

Undoubtedly, credit cards come with their set of benefits especially in times of exigency but using it frequently can lead to a mountain of debt which will hamper your savings. Also, it tempts the user into buying things that are not required on an immediate basis.

One way to curb your credit spending is by asking your banker to decrease the current limit. Another option that can be explored is to ask your family members to hide all those extra cards.

Patience game- it curbs binge buying.

Go to shopping with a list and do not deter from it. We are always tempted to pick something extra off those racks, be it a cute pair of shoes or that trendy biker jacket but beware these small additions go a long way in exceeding your budget.

Next time you are tempted to buy something impulsively, walk way and this exercise over time will reduce the tendency to buy unnecessary items.

Last but most important of all –Track your expenses on a weekly basis.

Your responsibility doesn’t stop with just planning a budget but strict weekly monitoring is required to understand if the plan had been implemented to the dot or if there were some deviations on the way. If latter is the case, monitoring will help you to take the required corrective actions.

Life is not only about saving and scrimping but to be enjoyed as well. One can lead a life of good quality i.e. pleasurable and tension free only when savings go hand in hand with doing things that give you joy ( Remember ! if only latter is done in moderation).

If you are also interested in getting your articles published here, please mail them to This email address is being protected from spambots. You need JavaScript enabled to view it.

See here

Kotak moneywatch newsletter