Q. I am a 28-year-old housewife. How do I manage a household budget well? Do I need help from a financial advisor?
A budget, as you know, is the best way to make the most of the income available and to track all your expenses. Here are three simple steps to efficient budgeting:
Plan: Make it realistic. Know the monthly income available for your household expenses. Track and categorise each expense. This will help you know where you are spending the most and where you can save the most.
Action: Track your expenses regularly. Make the most of every opportunity to save (is the department store having a genuine discount sale?). Cut down on discretionary expenses (you enjoyed a weekend break recently, so skip it this month?). Repair and reuse what you can. Keep a sharp focus on essentials. Define a goal for which you want to save. Having a plan will help you control your money better.
Review: Budgeting is not a one-time process. You must review it every month. If you overspend for one month, rather than get frustrated, it is more productive to understand why it happened and how you can change your plan to avoid a repeat. Once you know how and why, it becomes easier to avoid the same money mistake the next month.
Making your budget work
Be as accurate as possible with the figures: Have different envelopes for different expenses—groceries, tuition fees, electricity bills, etc. Use the money from each envelope for that purpose only.
You can use certain mobile apps to categorise and track your expenses: You can follow the basic rule of 50-30-20. Use 50% of the budgeted amount for needs (daily necessities), 30% for wants (what you would like to have if possible) and save the remaining 20%.
Follow the 3R mantra—reduce, reuse and recycle: Create an emergency corpus. This should be sufficient to meet 3 to 6 months of your regular expenses in case any unforeseen development blocks or diverts your income.
When you need a financial advisor?
Budgeting is a personal activity, and most often you will not need a financial advisor’s help. However, if you are uncertain about how to manage your money, and how to invest for your and your family’s future, do engage a financial advisor.
This professional will advise you how to invest your money wisely keeping your specific needs and limitations in mind. This will help you reach your goal faster.
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