Expenditure Management: Important Tips
How to manage the expenses important tips:
1. Priority: Prioritise your expenses as per priority of that time with A B C tags of most important, more important , and important tags.
2. Catagory: Catogorise your expenses according to quantum. Classify your expenses as small, medium,and large.
3. Budgeting: Prepare a monthly, quarterly, and yearly budget of all expenses based on average annual income generation.
4. Bufferring: Provide a buffer to unforseen and unexpected immediate expenses by creating a reserve out of monthly, quarterly and yearly income to meet emergency expenses.
5. Prudent Investment : Prudent investment plan helps in generating reasonable income out of extra/ surplus income for creating future corpus of fund for meeting large expenses on creating assets in the form of house and landed property, or movable property in the form of car/scooter/any other high value movable asset.
6. Borrowings: Borrowing decisions to be taken carefully after analysing pros and cons of borrowings analysing the terms and conditions of loan ie: interest, tenure, repayment plan and the incidence of monthly EMI and other service charges on monthly income. The quantum of EMI should be comfortable for repayment without affecting monthly expenses bringing it to compromise on account of large repayment of loans.
A suitable advise of unbiased financial consultant should be taken if needed before taking credit decision of any kind.
6. Alternatives and Options: This aspect is very important which is either ignored or not considered in right perspective. Products which are scarce and not available in open market should not be purchased in black market paying heavy price.Instead seeking alternatives of such products which are reasonably of good quality should be considered.
Use of cheaper mode of transport like bus, share auto , share taxi, autorikshaw, instead of car or rented cab should be used provided there is no urgency of reaching the destination, sans situations which does not permit use of such options in selective cases.
Travel by train/bus instead of flight should be undertaken when there is no emergency in reaching the destination at the stipulated period of time.
Exercising this option may save lot of money for future use.
Only for sake of showmanship heavy expenditure in throwing parties in celebrating birthday and other auspicious occasions with pomp and show should be avoided.
Instead a small get together inviting friends and relatives with song and music talent show by kids and invited guest talents would make it more effective and enjoyed memorable event.