Today we talk about how to prioritize your goals and organise your finances so that you can meet your targets in the easiest possible manner.
Check out these four steps that will help you budget your finances in the best possible way.
Identify Goals and Prioritize- The No 1 rule for financial planning
The goals can vary from higher education to marriage to buying a car. Once you have jotted down the list, prioritize and elimination the avoidable ones e.g. buying a car can be delayed by a few years if you are looking forward to getting married in the near term.
Create an Emergency Fund and Cover the Risks :
A typical emergency fund usually caters to situations like loss of a job. It should be sufficient to last around 6 months. So if you spend 15000 Rs a month, keep aside Rs 90000 for this fund. Apart from this cover the risks – risk against accident, disability, ill-health and death. This is important so as to take care of you and your dependents, in case, God forbid, something happens to you. You can cover yourself through an appropriate mix of term plans, mediclaim and health insurance.
Budgeting Finances – Create Goal-Based Funds :
A goal-based fund would look like –
Saving 2,00,000 in 2 yrs for a car
Saving 8,00,000 in 3 years for marriage, etc
Calculate the monthly savings accordingly. So instead of spending and then saving, first save and then spend.
Organize your Finances :
Cut out on leisurely expenses. It doesn’t mean cutting out on your leisure, but it simply means finding alternate sources of entertaining yourself. Instead of watching movies in a multiplex, opt for smaller, cheaper theatres, or better watch them on a rented DVD. Ladies can cut down their visits to beauty parlours and opt for self – do packages.