For example, if the commute is long and you don’t use public transport, then you may want to consider a vehicle that is fuel efficient to keep your costs down.Ĭhild’s education-6-10%: You would like to give the best you can for your children. This is again a category that allows you to economise depending upon your income. Transport-10-15%: The cost of commuting includes fuel charges, any auto loan repayment, and auto insurance. Judicious use of electrical appliances, a more cost-efficient mobile phone package, and choosing only that bouquet of TV channels that you watch regularly are some ways to keep expenses low. Shop around for good deals that meet your needs, and don’t pay for facilities you will not use. This is an area where you can exercise some control. Utilities-10-15%: This includes electricity, water, communication, cable and other expenses. Try and regulate the number of times you go out so that you can use the amount you save under this head to fund other contingencies," said Johri. “Keeping an eye on how many times you eat out, which is a discretionary expense, can be a good way to regulate your budget because you can eat out at a place for 500 or for 10,000. This includes eating out, and if you find yourself exceeding the allotted limits, this may be the cause. Exceeding one-third of your income, especially in the form of a loan, is risky to financial stability since it will restrict your ability to spend or even take loans for other needs.įood-15-25%: Along with housing, this constitutes the biggest expense of a household, especially when income is low. Include any mortgage insurance, taxes and other mandatory dues on the property in this amount. It may be in the form of rent or equated monthly instalment (EMI) on a home loan. Housing-25-33%: Housing is a major expense to be met out of one’s available income. Children, too, should be involved in activities, such as, saving electricity," said Prakash Praharaj, founder, Max Secure Financial Planners, adding that these small contributions make the family aware of expenses. In a single-income family, one member can curb the other’s expenses. “It’s important to work on limiting your expenses as a family. Have an investment plan in place so that your savings will work towards meeting various financial goals. In fact, the sooner you start, the easier it will become for you to inculcate it as a habit," said Shilpi Johri, head-financial planning, Arthashastra Consulting, a Gurgaon-based financial advisory. “Try and start saving as early as possible in life. Also, have adequate medical insurance apart from what is provided by your employer. Be adequately insured for all three," said Shah.įor medical emergencies, financial planners advise on contingency funds for 3-9 months’ expenses. “There are three basic types of emergencies-loss of life, medical and job loss or potential loss in business. Savings-15% onwards: The first goal for your savings should be to create an emergency fund. Use the percentages as guides, but custom tailor the budget. Here are some percentages that can be used as pointers. Based on this, one can prepare a budget," said Melvin Joseph, founder and chief financial planner, Finvin Financial Planners. Care should be taken to reduce unwanted items in future. Write down all expenses for three months and then review. At the same time, consider any allowance, such as for accommodation or travel. “Work with your take-home pay so that you don’t exceed what’s available. This will help you stay within your income and take care of saving priority. First of all, limit each head of expense to a range.
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