Whenever someone speaks about budgets and money management, budget-haters usually roll their eyes and turn a deaf ear or run in the other direction. They would rather be peeling pomegranates in jail than talk about a budget, let alone attempting to make one for themselves. If this is you, read on.
It’s time someone addressed the elephant in the room. Let’s admit it. You hate budget talks and could come up with a bazillion excuses for not making or sticking to one. But you know what? You’re not alone.
A lot of people, young and old, make up ridiculous excuses to just avoid being financially responsible. We found some of the most common (and might we add, lame) excuses people give to avoid making a personal budget:
Budget is B-O-R-I-N-G!
You think making a budget is boring? We’ll tell you what could be boring. Losing your job and twiddling your thumbs all day at home watching the 500th episode of Sasural Simar Ka. Oh, wait! You won’t have a cable connection at home because you will be too broke to pay your bills. So, you’ll just be twiddling your thumbs until you find your next job.
We think waiting at the traffic signal is boring. We think getting up and brushing every morning is boring, but we do it anyway. Right?
Living on the vicious paycheck-to-paycheck cycle can be really dangerous. What if you suddenly lost your job or there was a medical emergency? Setting up a budget will definitely help you sat aside a considerable portion of your paycheck. Downloading a budgeting tool on your smartphone can help make the process easy.
Read This: How Budgeting Can Transform Your Financial Life
I Do My Budget in My Head
Yeah. Right! How much do you spend on food every month? What about your cab rides around town? If you couldn’t really answer that in a jiffy, you definitely don’t have a budget in your head or anywhere else.
There are umpteen number of things to remember in a day. You hardly remember your best friend’s birthday, how do you imagine you can remember how much you spend and on what every month?
When you sit down with a budget and list out your expenses and other financial commitments including Insurance premiums and Credit Card bills, you figure out how much money goes into what and places you can curb your expenses to save a pretty penny.
I’m too young for a budget
Technically, my friend, you are never too young or old for a budget. Your parents didn’t buy you that cute piggy bank for nothing. They were trying to instil some good saving habits in you early on.
When you’re young, you have the ability to make more money and the propensity to spend more than what you make. Make a budget to understand where you can put your money so it can multiply and relax when your heydays are gone.
Budgets are Depressing
You know what’s more depressing than making a budget? Getting a “card declined” message when you’ve already dined at your favourite restaurant. We get it that your budget is full of numbers and you’ll need to work out the math (it’s worse if you’re bad with numbers). But trust us when we say crafting a budget would leave a big smile on your face, especially at the end of a month. When you see the amount you’ve saved, you’ll not just be happy but also feel a warm sense of pride. That is anything but depressing.
Check This: 4 Possible Leaks In Your Budget
Budgets are Restraining
If you think to go on a budget would actually restrain your fun, here’s news – not really! A budget does not mean not spending. It just means scaling back on the amount you are spending.
It’s just like splitting three meals into six, while also keeping track of the calorie intake. You can always go shopping but instead of buying something designer, you would probably have to buy it at a thrift store or maybe an online store that offers greater discounts. Or you could always buy your designer product with a Credit Card, where you can pay it off in EMIs.
Isn’t that more practical?
I Don’t Earn Enough for a Budget
This might be a genuine reason but research proves that low-income families tend to spend more if they don’t stick to a budget.
The truth is, you can craft a budget even if your income is low. You especially need it if you don’t earn enough. A budget will help you keep track of your expenses and channel your money into investments where your income can double.
A budget gets you started with good financial habits, which in turn can help you build a better Credit Score!
What An Ideal Budget Looks Like?
As a universally accepted rule, here is what your ideal budget would look like. Your Income – 100% – should be divided in the following manner:
- Housing: Home Loan EMIs, rent etc. (35%)
- Food: Groceries, baby food, pet food etc. (10% – 20%)
- Transport: Cabs, buses, car maintenance, fuel, Car Insurance (10% – 20%)
- Personal: Eating out, movies, shopping, recreation and entertainment etc. (5% to 10%)
- Utilities: Gas, cable, DTH, internet, electricity etc. (5%)
- Medical: Health Insurance, over-the-counter medicines etc. (3%)
- Debt Payments: Credit Card bills, student loan EMIs etc. (5% – 15%)
- Savings: Fixed Deposits, Recurring Deposits and other investments. (5% – 15%)
Additional Read: The 50-20-30 Financial Rule Of Thumb
While this might look like a lot of stress (all those numbers and percentages), once you actually start with the process, you will understand that your spending habits have become better and you save a lot of money.
Ready to save more? Start a budget today and put all your saved money someplace it can multiply! A Mutual Fund sounds like a good option.