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1 July 2020 | 4 min read

5 Simple Rules To Follow While Preparing A Budget Plan

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Money matters, {especially preparing a budget plan} don’t have to be complicated. Sometimes, drilling down to a handful of simple rules can help you prepare a budget plan and reset your financial habits . High-level budgeting rules also give us a lifelong framework to go back to and act more like principles for our overall financial management than intimidating restrictions.

So whether you were born with a silver spoon or made it big on your own, when it comes to financial planning, there are some very basic {yet super important} budgeting rules everyone must follow for a safe and secure future. Don’t worry. These are quite easy to follow. Ready? Let’s do this.

Plan Your Future

Start financial planning

Do not keep pushing your budget making or financial planning to some other time. The time is NOW—this minute. You can pick up a book and pen and start noting down your daily expenses. From something as simple as groceries to jewelry – ensure that you’ve made a note of every rupee spent.

You can total up all the money you’ve spent by the end of each month. It will give you a distinct idea of how your monthly expenses balance against your income. You will also be able to point out places where you could’ve saved money, impulse buys, online indulgences, etc.

Pay Your Bills On Time

Pay bills on time

So what if you receive your phone bill on the 1st of the month and the due date to pay is the 14th? Pay it right away. Every month budget your monthly spending for the coming month to know what and how much you need to spend well in advance.  

Phone, electricity, rent, taxes, EMIs, etc. all boxes must be checked in the first week of each month. This way, you will know how to invest or plan for the rest of the money on hand.

Get To Know The 50/30/20 Budgeting Rule

Devide your salary

A balance between spending and budgeting gets a lot simpler when you have a structure in place. You don’t need a million different budgeting rules to shore up spending habits. Using the 50/30/20 spending rule dramatically cuts down on the complication of understanding where your money goes. 

The first 20 percent of your money goes to savings, or “future you.” Paying yourself first is a standard budgeting rule for a reason. It makes sure we do our best to fund our retirement and unexpected needs. Does 20 percent feel like a significant chunk? That’s OK, work up to it and add a percent or two every year as your income permits.

Next, put 50 percent of your spending on essentials like rent, groceries, and everyday items that are recurring basic needs. Lastly, leave 30 percent for your lifestyle spending—whatever that means to you. That can be saving for vacations, funding goals to launch your own company, or even something as meaningless as splurging on a new wardrobe item.

digibank offers you a wide range of investing options, depending on your budget plan and income levels. From SIP to FDs , there is something here for everyone. If you are new to investing, we recommend you to start a SIP as soon as you get your salary. The best part is that with INR 500 every month, you can build a substantial investment for your future. Start one today here.

All Your Eggs In One Basket Is A Bad Idea

Never invest just in one place

When it comes to planning for your future, most people make the biggest mistake in investing in one scheme or plan. Parking a considerable amount in just one option increases risks against having at least more than two investment options.

They could be investing in gold, mutual funds, bonds, and even buying property. Do not postpone or dismiss consulting an investment expert before you make any decision about your hard-earned money.

Ditch Saved Cards On Your Computer And Phone

Remove cards saved on websites

This can be another game-changer in your budgeting plan. It is incredibly easy to store credit cards in your favorite shopping apps or sites. Not only can this be a bit of a security risk, but it makes it so much easier to spend mindlessly. We highly recommend you take some time out and go through all your regular stores and delete any stored cards.

Now, checkout might take a little longer, but the actual act of going through to grab a card from your wallet will give you time to think about your purchase. Do you need what you are about to buy? Does it line up with the above 50/30/20 rule? These quick moments of reflection will ensure that your spending remains purposeful, instead of emotional or reactionary.

Bonus Tip – Never Spend To Impress

Spending to keep up with social media or a specific idea of what your lifestyle should look like is always a bad idea. But that pressure can be hard, and is often something we don’t even realize is around us. Are you buying something because you saw it on a friend? Or on Instagram? Or because you’re shopping with friends and they get it? Start following the budgeting rules, and you will soon be able to overhaul your lifestyle to rein in your excess spending – good luck. 

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