Budgeting Tips For The First-Time Financially Independent Soul

By | July 23, 2017


Moving out of your parents’ house or planning to live on your own in a new city? Just graduated college and are moving to a new city for your job and will be living alone? Getting divorced and moving out of your partner’s home to start all over again?

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While it’s not common for Indians to live on their own, a large number of Indians have now started living on their own. Be it because of a change in city or a new job offer or sometimes for the sake of Independence, there’s no denying that the trend is catching up in India too, especially in the metropolitans. Well, while living on your own will give you a great sense of freedom, it is very important to change your saving and spending habits. So, here we are to help you with budgeting tips that will help any first-time financially independent soul.

‘’A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life’’, someone has rightly said this. If you are moving out to start living by yourself, it’s going to be extremely important to be prepared for all sorts of circumstances.

The only way one can truly be financially independent is when they manage their finances such that they never have to worry about what’s going to come. If the ‘what-ifs’ bother you a lot when you move out, you might be living independently but you are certainly not living a financially independent life. So, we have these awesome tips for you which will help you when you start exploring the financial waters by yourself. Read on!

Additional Reading: Why Credit Cards Mean Financial Freedom

Emergency fund, please!

No matter how many times one hears that emergencies come unannounced, the number of people who are actually prepared to deal with an emergency is very low. Life can throw unexpected expenses at you anytime. There’s so much uncertainty in life; won’t it be great to at least be certain with your finances? So, it’s important to start your new life by starting an emergency fund. You can either put money aside in a high-interest Savings Account or a Recurring Deposit. If you are living a hand-to-mouth life, you will never be prepared to face an emergency. The best way to start an emergency fund is by putting aside the money at the start of every month. Never spend first and then save later. Always save first and then spend later. This is the mantra of most rich and successful people.

Set a target for your emergency fund. You can set it as Rs. 1,00, 000 or Rs. 10,00,000 or as much as you want. Each month contribute a small amount to the emergency fund till it reaches the target that you set. Once you reach the target, keep earning interest on that amount. Don’t use it unless some emergency comes knocking at your door. Got it? Trust us, when you achieve the target set by you, life will only get easier. Each time life throws lemons at you, you will be able to deal with it a little better compared to the time when you lived without an emergency fund.

Additional Reading: Tips To Handle An Emergency That Costs More Than Your Emergency Fund

Once you achieve the set target, you can keep adding more money to your savings. You can start with saving as much as one month’s expenses and moving on to saving expenses for six months or a year. This will help you deal with an emergency of any kind. Whether you lose your job or fall ill and have to take a sabbatical, you will be prepared to deal with the situation. And this is why emergency funds are a must if you want to lead a financially stable life while living alone.

Analytical shopping only

Moving out can be an exciting (also read as expensive) affair as the idea of setting up your own house brings up the prospect of shopping for numerous things. Be it bedroom furniture, living-room necessities, kitchen utensils and appliances – there are a lot of things that you will need to buy, or at least feel the need to buy.

If you find a furnished house, you can save a huge amount of money as you won’t need to buy furniture, which is likely to burn a hole in your pocket otherwise. If you don’t find a furnished house. You can rent out furniture and appliances. Unless you really feel the need to buy anything, don’t waste money to buy it. Thank us later, especially if you plan to move houses. If you have a lot of bulky stuff, moving will cost you a bomb. And we bet you don’t want that!

Additional Reading: Should I Buy A House Or Continue Staying On Rent?

Another thing that you could do is borrow things from your close ones. Most of your friends and family are likely to have extra things at home. Be it dishes or juicers or little things that they may have received as gifts. And you’ll be surprised to find out how willingly people will lend you their extra stuff. We get it that it may not be as per your taste but the money that you will save will certainly make you helpful.

If the option of borrowing too doesn’t work out, you can consider websites that sell second-hand things. There are numerous groups on social networking websites too where you can find posts about things to sell. In fact, if you are lucky, you can find a good garage sale in your part of the town. At any of these sites, you will find what you need at a reasonable price. So, you can get what you need without burning a hole in your pocket.

So, when you are shopping, don’t forget to make a list of things you need and things you want. Always prioritise your needs over wants. You may want a lot of unnecessary things, so make sure you analyse the list and tick off the things that aren’t actually a necessity. Cool?

Money to party!

‘Work hard, party harder.’ This might have been your mantra earlier in life, but once you start living on your own, it will have to change. Considering there will be numerous financial responsibilities on your shoulder, life will become more serious. But a little partying has never hurt anyone, right? So, while you are busy handling life independently and leading a serious life by sticking to a strict budget, you can set aside a budget for fun too.

What do we mean, you ask? Well, you need to budget in fun stuff no matter how tight your budget is. One needs entertainment in life for their mental well-being and nobody should ever compromise on that especially when they live alone. That’s a risky idea.

Additional Reading: How Budgeting Can Transform Your Financial Life

There’s no point in cutting down your budget a lot, saving a lot but being unhappy all the time. You can give yourself cheat days when you can pamper yourself. Be it a spa session, a movie date with yourself or friends, dining out at your favourite restaurant, going for a drink with your friends, let yourself enjoy on the cheat day. Living the same routine will exhaust you mentally and these little breaks will help you stay happy.

If you chalk out your budget smartly, you can indulge all you want. If you want to travel to Paris or some other foreign destination, there’s absolutely nothing wrong with it and nothing should stop you, not even the fact that you are trying to live on a strict budget. All you need is efficient budget planning and you will be able to fit in your dream vacation into the budget in a few months. Frugal living or not, effective budget planning is the way to lead a happy yet financially independent life.

Budget: before and after

This is one of the simplest but important points. Figure out your budget before you move out and after. There will certainly be a difference between the two because once you move out, there will be a lot of additional expenses like rent, water bill, electricity bill, among others. So, when you are writing down your budget, take all these points into consideration.

One thing you have to realise and accept is that your budget before moving out will be less strict as compared to the one that you plan to follow once you move out. After you move out, observe if you can comfortably follow the budget that you had chalked out. If not, you certainly need to rework it. You will have to decrease some expenses and cut off some in order to lead a financially independent life.

Automate as much as possible

Yes, doing this will not only save you a lot of time but will also help you save money. We’ll tell you how! Automate as many payments and investments that you can. There are numerous apps out there which will help you automate your finances. So, you can opt for automatic deduction of utility bills from your bank account two days after your payday. You can check with your bank in order to set automatic deductions. Or you can rely on one of the financial apps.

While you can schedule your payments, you can do the same for your investments too. You can opt for automatic deduction of investment schemes like Recurring Deposits. So, you will be living your life like the rich, who save first and spend later.

Don’t forget about the apps that let you track all your expenses. Download one of these apps and start noting down all your expenses in this app. By the end of the week or month, you will get where you stand financially. This will be very helpful especially when you are trying to abide by your strict budget.

Budgeting grocery shopping and dining out

We must warn you that one of the most difficult things while setting your budget is trying to set a grocery budget and follow it. On most occasions, you might never have done grocery shopping before or you might be used to shopping or cooking for a lot of people. You can make a list of groceries that you need for a week. Try buying only limited things. See how it works out. If it’s still excessive, try and cut it down the next week. If it’s lesser than what you need, try and increase a few things. Once you finally figure out how much you need per week, you can safely shop for groceries on a monthly or fortnightly basis.

Additional Reading: The Future Of Online Grocery Shopping In India

One way to create the grocery list is by penning down a meal plan. You can jot down what you plan to eat each day for breakfast, lunch, and dinner. This will help you get a clearer picture of your week and thus, help you shop better. Cooking for one person can sometimes be very annoying. So, you can cook the same meal for two people and eat it for dinner and the next day too. This is quite useful for those who aren’t morning people. Morning people can do the same but use the same meal for lunch and dinner the same day. Save time, money and don’t waste food. It’s a win-win situation!

Living on your own can get difficult sometimes, emotionally as well as financially. If you have a bad month, don’t let it win against you. Don’t run to your family or friends for help immediately. Give yourself time, and before you know it, you will be back on your feet. Once you get the hang of it, you will love the feeling of being a financially independent soul.

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