“Whatever I do, my weight does not come down” and “Whatever I do I cannot reduce my expenses” – are commonly heard statements.

If you are a doctor, a wealth guide, a financial planner, …you hear both of these statements. Normally people do not write down diligently what they earn, spend and invest.

Similarly for reducing weight you need to maintain a food diary which will tell you what you eat…and then you can analyse the same. See www.myfitnesspal.com

Let us see what makes a good budget? In all the budget blunders exercises, the same few problems keep rearing their ugly heads. To avoid them, here are the important features of a successful budget.
1.    Categories that fit your personal situation and your families’ spending habits.

2.    Accurate income projections. Salaried individuals have it easy. In case of self-employed people – they tend to dramatically over/under estimate their incomes.

3.    Enough categories to give you a meaningful picture of where your money goes and where you might be able to cut costs, but not so much detail that tracking is a chore that you’ll soon give up. Breaking up of your medical expenses into doctors’ fees, and medicines is fine. But if you try further breaking up medical expenses into generic and branded – you might give up the whole exercise.

4.    Inclusion of expenses that don’t occur on a monthly basis, such as car maintenance, term life insurance premium, festival expenses, clothes buying, etc.

5.    Regular review of categories to determine if you need more or fewer, review of expenses, and brainstorming about ways to reduce costs in each category.

6.    Cash spending is a big leak in most budgets. Cash disappears quickly and if you don’t write down everything you spend it on, you will not have a clear picture of your spending.

7.    A minimum saving amount – at least till you build your emergency fund.

8.    Realistic written goals. Budgeting is about setting financial goals (saving for a down payment on a house, buying a new car, getting out of debt, saving for retirement, putting your kids through college, travelling, etc.) and finding ways to meet them.

9.    Identification of spending patterns you may not have been aware of when you weren’t tracking your spending.

10.    Most importantly, internal motivation and a positive attitude!

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  1. Hmm,

    I have always had the below problems while budgeting.
    how to include EPF, will it form part of savings ? or need to be excluded while budgeting ?
    How to provision for annual bonuses which is variable

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