Moneycontrol
Oct 11, 2012 02:25 PM IST | Source: Moneycontrol.com

How to control your money

With a constant surge in the cost of living, people are finding it more and more difficult to live within their means. Our incomes are barely sufficient to provide for our expenses and saving money is the last thing people can think of. The commonly asked question in such a scenario is “How do I save money when I am struggling to make ends meet?”


Swati Mukund
MSVentures Financial Planners


With a constant surge in the cost of living, people are finding it more and more difficult to live within their means. Our incomes are barely sufficient to provide for our expenses and saving money is the last thing people can think of. The commonly asked question in such a scenario is “How do I save money when I am struggling to make ends meet?”


Here are some tips which can be followed to control our expenditure. One cannot expect to save money immediately one starts following them, but these simple steps can certainly help in curtailing one’s outflows.


1. Give yourself a budget
The word “budget” can send shivers down your spine, but let us ensure you that it isn’t as scary as it sounds. It simply means to give yourself a benchmark figure so that you can monitor whether you can stay within the limits.
For e.g. If one currently requires Rs. 30,000 to run the household, he/she should ensure that they withdraw only the required amount and not more than that. Once we have only the stipulated amount of Rs. 30000, we can then slot it into various categories such as grocery, fuel, medical expenses etc.
Having excess liquid cash at one’s disposal doesn’t always work to their advantage. It gives one the message that they can spend more than what they actually need to.


2. Itemize your expenses
Most of the expenses of a household are due at the start of the month for eg. Grocery, Society maintenance and so on. The trick is to note down each and every item of expenditure so that you don’t lose track of what you’ve spent. You can either maintain a notebook or an excel sheet depending upon your convenience.


At the end of the month, when you see your expense list in black and white, that’s when you realize how well you’ve done through the month. You might have spent far less than what you provided for or you might have exceeded your monthly budget. But this will give you an idea and a reminder to do better in the following months.


3. “If you buy things you do not need, soon you will have to sell things you need” –Warren Buffet
With the nature of products available in the markets and the ever-increasing number of shopping malls, one needs the strength of elephants to say NO to their wants. Before purchasing any product, always ask yourself one question “Is this a need or a desire? Most of our so-called needs turn out to be stuff which we don’t need at all. At the moment of purchase, they seem like commodities we cannot live without and we convince ourselves to buy them. But when it actually comes to using it, half of the people don’t know why they bought so much stuff and the other half don’t know where all the stuff has gone. For eg. Clothes and accessories- the more we have of them, the less we feel contended. Ask yourself whether you visualize wearing this often or you can do without buying it.


4. Keep your credit card out of reach of yourself
This may sound like a funny disclaimer but it actually works. The amount of cash we carry when we go shopping can be limited, but we also carry with us some plastic cards which are free to carry but are really expensive when used. The limits on these cards are thousands and sometimes even lakhs of rupees. People, many-a-times swipe their cards for stuff they probably don’t need and are in a fix when the bills arrive. Credit/ Debit cards are not always dangerous. Sometimes urgent medical or other unforeseen expenses can be met with, with the help of these cards. But when they entice you into spending money, that’s when you need to lock them up in the cupboard. Credit Card companies offer cards and high limits on them because it is their job to ensure that you spend money, so that they can retain their jobs. But remember that, the person paying these bills is none other than you yourself. The interest charged on outstanding payments is a whopping 36% p.a. which is added to the bill on non-payment. If you already are in such a situation, we would advise you to settle this as soon as possible.


5. Monitor Yourself
At the end of every month compare your expectation with reality. At first, it may seem depressing but as the months go by and you see results in the form of surplus money, you will thank yourself in the long run. The money thus saved can go into something more productive in the future.

Always remember, curbing a lavish lifestyle may seem difficult but not having one is worse. So the next time you go shopping you know what to do.
  
The writer is Head Admin Team at MSVentures Financial Planners.

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