How to create perfect budget for financial freedom

Discover proven strategies how to create perfect budget for financial freedom. Start your journey to becoming financial independent.

Have you ever thought that when we get our salary at the beginning of every month, we dream big? We will buy new clothes, go out with friends, buy expensive gadgets but at the end of the month, we get only one thing and that is empty pockets and broken dreams.

Does this happen to you too? If yes, then you are not alone.

Crores of people try to make a budget every month but fail to follow it properly.

Control your expenses

But imagine if you have a way by which you can not only control your expenses but also buy your favorite things without any worry, then you will think whether this is possible? So yes it is possible and in today's article I am going to teach you this.

First of all, let us learn what this is.

On hearing the name, some negative thoughts often come to our mind.

Like budget means putting restrictions on expenses or budget is made only in the absence of money.

But the truth is that budget is not a restriction.

Rather it is a means of giving the right direction to your money.

Simply put, a budget is a plan that creates a balance between your income and expenses.

It tells you where and how your income should be spent so that you can achieve your financial goals.

Things can get confusing very quickly.

For example, if you have an income of Rs 50,000 a month, whether it is a salary or a business, your budget will decide how much of it should go towards your fixed expenses, variable expenses and profitable investments.

This will not only help you meet your needs but also fulfill your future dreams.

Let us understand this with an example.

Sow all the seeds with proper planning

Imagine you have a small farm.

If you sow seeds without any planning, some may fall at the right place and bear fruit.

But most will go to waste.

What if you sow all the seeds with proper planning? What to grow in which part of the farm? What time to water and how to apply fertilizer? If you know how to treat it according to the season, then you can get maximum yield.

The same thing applies to your money as well.

The more systematically you spend money, the better your investment will grow and you will be able to achieve all your goals systematically.

See from your last example that you have a monthly salary of ₹ 50,000.

If you spend this money without planning, then at the end of the month you will know that the entire money has been spent, but savings could not be achieved.

On the other hand, if you spend this money by making a proper budget, like one part for house rent, your bills and all expenses. Second part for savings and investments.

Third part for entertainment and shopping, at the end of two months, not only will your expenses be met but you will also have some savings left and this savings will gradually help you in achieving your big financial goals

Making a budget teaches you financial discipline

It helps you understand where your money is being spent properly and where it is being wasted.

For example, if you are spending ₹2000 per month on junk food, then after making a budget, you will think that by saving this money, you can purchase a small thing in a few months which is very important to you right now or can you go somewhere with the family with that money? Let's understand this through a small story.

Rohit, who belonged to a middle class family and used to feel the shortage of money at the end of every month, started using a credit card to maintain his lifestyle.

Due to which he now had a huge debt.

Then on the advice of a friend, he started making a budget.

He kept 50% of his income for fixed expenses, 30% for variable expenses and 20% for savings.

In the first month itself, he saw that his savings started increasing and after six months, he had saved a good amount and also bought a bike of his choice.

Therefore, Rohit learned that making a budget is not only giving him financial security but also helping him to fulfill his desires.

Your budget is a roadmap for your financial health

Just like a doctor makes a health plan for you, similarly making a budget is a sure way to take your financial health in the right direction.

The budget ensures that you use your money at the right place.

Avoid unnecessary expenses and fulfill your long term goals.

So the first and most important step of making a budget is to analyze your income and your expenses properly.

You have to understand how much income you are getting every month.

And where and how you are spending it.

First of all, do a proper analysis of your income.

See, this income of yours can be the salary you get from your job or business.

It can be income through freelancing or it can be some other side income.

Wherever your income is coming from, that is your ultimate income.

You can note it in a diary or use some such app.

It is very important to understand how much income you are getting in total, that is, the amount you are getting so that you can make your budget accordingly.

Now for example, suppose your monthly salary is ₹ 50,000, you earn ₹ 3000 from there by doing some part-time work.

If you have deposited some money in the bank, then you can get ₹ 2000 from there as well as some regular money.

If we calculate the income on the Euler basis, then in total you get a total of ₹ 55,000 monthly income.

Let's now talk about your expenses and this is the most important step because from here you will know where your money is going.

You have to write down all the expenses, even if they are small expenses.

Like daily tea or big expenses like house rent, everything has to be written.

For this, you will see three months' bank statement and credit card bills.

This will give you an idea of ​​where your expenses are being incurred.

You can divide all these expert teachers into three categories - fixed expenses, variable expenses which are the expenses that remain the same every month and cannot be avoided under any circumstances like house rent, EMI, children's school.

You have to cover these expenses first.

This is very important for your life and cannot be curtailed under any circumstances.

Variable Expenses Variable expenses are those which can change every month like electricity bill and these expenses can be controlled a little.

Before learning any stock market course, you must do these three things.

First, what does that course teach you? So fuel, grocery and fuel can be controlled a little.

For example, if you pay electricity bill of ₹ 2000 every month, then you can reduce this expense to ₹ 1800 by reducing the use of electricity a little.

Similarly, while shopping for groceries, keep an eye on discounts and offers and you can control it a little by buying only the necessary things.

Keep an eye on discretionary expenses

Discretionary expenses are those which you can do or avoid as per your wish.

These expenses are not necessary like movie tickets, landing out and shopping of unnecessary things.

If you want to improve your budget, then you have to pay maximum attention to controlling these expenses.

For example, if you spend ₹2000 every weekend for dinners out, you can reduce it and cook at home.

This will not only improve your health but also save you money.

Now that you have done your expenses, it is time to adopt the most popular and effective rule 503020.

This rule is very effective and it is also very easy to follow.

According to this strategy, 50% of your income should be for expenses like house rent, MI, grocery and kids.

Cover these first because they are a must for your life.

As we saw that your total monthly income is ₹55,000, then you should keep ₹27,500 for fixed expenses.

After that 30% of your income should be for variable and discretionary expenses.

Here you have to spend a little smartly.

And try to save some money from this which you can add to your savings.

Here you should take out a maximum of ₹16,500 from your income of ₹55,000 for this category.

Now the remaining 20% ​​of the income should be for savings.

And this is the most important part because it secures your future and leads to financial freedom.

For example, out of an income of ₹55,000, you should keep 11,000 every month for savings and investments.

You can invest this money in different places according to your financial balance.

Like Bank of East Mutual Funds, Stock Market or an emergency fund.

Remember that Bas Rating is a dynamic process.

As there are changes in your income and expenses, you will have to adjust your budget accordingly.

This is not a one-time process, but it is very important to monitor and adjust it regularly.

For example, if your income increases, you can increase the share of your investments or if your expenses increase, you will have to cut down on other expenses.

Making a budget seems easy but following it can be equally challenging.

Many people prepare a budget with great excitement, but fail to follow it for a long time.

See, there are many reasons behind it, which need to be paid attention to.

The biggest reason is an unexpected teacher or an emergency situation.

Suddenly a major medical emergency can come or if any household item gets damaged, it needs to be repaired or you may have to spend money to help friends and relatives.

Your budget can be shaken due to many such unexpected expenses

Attractive offers and discounts available in online shopping stores also become a big hurdle in following the budget.

Along with that, many times people make their budget more strict than necessary thinking that they will spend less.

They make a very big budget for themselves but in real life it becomes very difficult to follow such a budget.

You may be following it for a month or two but in the long term it is very difficult.

This can also be stressful psychologically and ultimately we are forced to leave the budget.

After that, if your budget has only monthly planning and does not include long term plans, then you may have a lot of difficulty in following it.

Ignoring the savings related to long term plans like buying a house, retirement planning or children's education expenses can also create problems.

If you want to make the budget systematic, then you should follow these things carefully.

To make it easy to follow mathematically, first of all it has to be made very simple and meaningful.

Let's see how we can make an effective budget and follow it properly.

If you try to cut down on your expenses suddenly, it may be difficult to follow it.

Instead, start with small things.

For example: Steve Jobs Signature This is London Tata Signature at This is Amitabh Bachchan Signature Start with small things.

For example, if you spend ₹ 5000 every month here and there, then try to reduce it to 4500 in the first month.

And gradually you can reduce it even more.

Budget for unexpected expenses

There should be some space in your budget for unexpected expenses as well.

Any emergency events like medical emergency or getting the car or bike repaired can completely spoil your budget.

That is why it is important to create an emergency fund for such expenses as well.

To follow the budget, tracking it is also very important and in today's digital age, you have many free tools and applications that you can use to track your budget and these apps automatically track your expenses and tell you how much you have spent and how much you have saved.

You can also use an Excel sheet to track your expenses.

In this, you can write down your daily expenses and total it at the end of the month.

Automation can be a very good way to follow the budget.

Automation helps you to ensure that your money reaches the right place at the right time.

You can automatically transfer a certain amount from your bank account to your savings account or investments every month.

This will keep your savings growing regularly and you will not have to take the tension of transferring it manually.

You can set auto pay for all your fixed expenses, such as bills and EMIs.

This will ensure that your expenses are cut on time and without any hassle and there will be no discrepancy in your budget.

Making a budget and tracking it is important but doing it regularly is equally important.

This will let you know whether you are following your budget properly or not.

If there is any mistake somewhere, then it can be corrected in time.

Along with that, you will have to monitor your budget properly at the end of every month.

See where you spent more than the budget and where you could have done better.

For example, if you see that you spent more than the budget on discretionary expenses, then for the next month, keep a check on that particular category.

Budgeting is a dynamic process that has to be adjusted from time to time.

For example, if your income increases, then you can increase the share of your savings and investments.

If your expenses increase, then you will have to cut down on other expenses.

Along with that, choose a day every month when you will not spend at all.

This is called a no spend day.

On this day, you can find new ways to save money.

Like cooking at home, wearing old clothes or spending time with someone for an outing.

This will not only increase your savings but will also make you realize the importance of money.

If following the budget seems like a challenge for you, then make it a little fun.

You can give yourself rewards

When you follow the budget properly, it will keep your motivation intact.

For example, if you follow your budget properly for the whole month, then give yourself a small gift like a new book or dinner at your favorite restaurant.

This will make following your budget a little easier and fun.

Friends, remember that making a budget is something that you will learn gradually.

Initially it may seem a little difficult but as you follow it, it will become an important part of your life.

Make your budget with taste and move towards financial freedom.

We will meet again another day