A Financial budget, also known as a money planner, is simply a spending plan decided in advance to help manage ones income and expenses. This plan, if executed well, can aid in savings and avoid unnecessary expenditures. Wants can never be limited, and at the same time, resources can never be unlimited. This very fact calls for effective management of funds, without which one is sure to go overboard and end up paying the price of tribulations. However, living under the tutelage of our dear parents, we never feel the pinch or need to monitor ourselves because of their forever presence to provide. Well, things are about to change if you are planning to follow your dreams and rush to study abroad for that much needed further education. Living in a foreign land can be tough as it is, adapting to a new place and surrounding is definitely not peanuts, especially one of the common problem that most people face are the language barriers, so the last thing you would be wanting is to run out of cash and walk around broke to the core. Heres where budget management comes into action. A well-defined budget will help you-
- Ensure survival
- Avoid unwanted expenses
- Save for the future
- Stay organized
- Avoid debts
Sounds fruitful now, doesnt it? While drafting a budget is no rocket science, it does call for bringing out the analyzer within us. Just as two individuals cannot be the same, two budgets belonging to different people can never be the same. For this very reason, it is important to customize a budget according to ones needs and wants. Keep reading to get an idea of how to create not just any budget but your very own personalized one and be true to it.
- Prioritize important expenses- The first step to creating a good and effective budget is to jot down all the fixed expenses, expenses that cannot be ignored, and are vital for your survival itself. These include expenditures related to renting, food, electricity, clothing, and similar such necessities. Set aside a round figure amount based on these expenses and remember to opt for the higher limit of them, i.e., since these expenses vary and arent constant, take a safer bet by setting an amount that wouldnt cross that figure in any case.
- Set aside entertainment funds- Entertainment is part and parcel of our ongoing lives, especially when Prioritize in a new country. The thrill of exploring new places and the taste of freedom is adventurous beyond measure. However, it is very important to monitor these expenses since overwhelmed by the fascinating new world, you easily tend to overspend, resulting in burning a hole in your pocket or much worse leave you hanging broke till the next payday. So, it is very important to set a limit on this spending well in advance. Use it wisely or spend these allotted funds extravagantly, that choice is all yours, but remember to stick to this pre-decided limit.
- Make a schedule There are countless times when we have set a plan and failed to follow it. Adulting is no easy task, and with it comes several responsibilities. Thus, to ensure a disciplined and organized lifestyle, it is important to set a schedule and follow it religiously. Be it hitting the gym or waking up an hour early, follow what you commit to because if you dont, a budget which is just a part of your life would surely fail to stand effective in a disorganized life.
- Set small milestones The point of setting small goals for yourself is to self-motivate you to keep going ahead and continue conquering those hurdles you thought you couldnt. Along with these mini-goals, make it a habit to reward yourself every time you accomplish it. It could be something small or something youve desired for a while. Treat yourself for following and being true to your budget. Having something to look forward to based on certain conditions would certainly aid in keeping you on track.
- Spread your expenses - Get into the habit of saving part by part. If you are aware of an upcoming huge expense or if you wish to fulfill a certain want, plan ahead of time and spread these expenses in the form of savings instead of enduring a huge expenditure from your regular income.
- Set aside a buffer budget A buffer budget is meant to prep you for future unforeseen expenses that may pop up. It is better to be safe than sorry in the time of need.
- Self-introspection The most effective yet hard task to do is self-introspect your decisions. Right before you decide on spending, make sure to ask yourself three questions-
Do I need this?
2. Is it worth it?
3. Is it important at the moment?
This simple trick will help you stay within your budget. If your answer to each question is yes, go ahead with your spending spree, if the answer to any of these questions is no, well, you know what you need to do. Nevertheless, you could always plan up and execute in the future. So, dont be disheartened!
- Plan in advance While enthusiastic about creating a budget, the first step to drafting one is to begin in advance. Set a budget from payday to payday, but begin planning when youre halfway through your monthly budget. Planning ahead of time allows you to include all expenses and savings required for the next budget without skipping any element due to the ease of time. The more effort you put into creating a budget, the more likely you are to stick to it to make your efforts worth it.
Even though following this new lifestyle while balancing the pressure of studying abroad may seem hard at first, remember to think about the negatives that would crawl behind your untimely decisions and influence your living. It takes just 21 days for a habit to kick in, so hang around, and you will perfect the art of budgeting eventually.
Abhyank Srinet holds a Masters in Management degree from ESCP Europe & has an engineering degree with a specialization in Instrumentation & Control. His interest in the digital landscape motivated him to create an online startup for Masters in Management application consulting (MiM-Essay.com), focused on spreading quality information about the MiM degree & performing application consulting services for clients. He is the chief consultant of the company and takes care of the Business Development and Digital Marketing side of the company. He is very passionate about writing and marketing.