Instead of saving by category, set a fixed amount for savings
If there is volatile earnings, then after every pay-check, put a fixed amount in the emergency fund
Taylor Tapper. Prior to the coronavirus epidemic, budgeting or handling has never been so difficult. Millions of Indians lost their jobs due to a lockdown imposed to prevent infection cases. Now budget planning has become very important in such a situation. We often skip budget planning or want to avoid it, because budgets are complicated. Despite all the difficulties, there are some measures that you can take to handle the budget.
Method # 1: if not needed
Sometimes saving and monitoring expenses is a huge task. The best way to do this is to break up the work into smaller parts instead of starting with the simplest thing. This is called a “small win” and is most effective in handling credit card expenses.
The same thing can apply to your budget. Check your credit card and bank statements for a small win. During the investigation, find out what is the charge that you are paying without any need. Remove a TV streaming service you don’t need yet. You can also call your bank and ask to change the card to low grade or no fee version.
Method # 2: Find Your Expenses
No matter how much you earn, you might not like to make a budget. Even according to the 2013 Gallup survey, only one in three households keep track of month’s earnings and expenses.
One way to handle the budget can also be to change the mindset towards the budget. Instead of dividing the spending of each rupee according to the category, set a figure that you can spend every month. Then even if you spend it anywhere.
Method # 3: Build a Good Emergency Fund
The method of spending up to a fixed number will not work for everyone. Especially when you do not have a fixed income. One such couple takes on Jeremy and Becky Moore, who have been chasing two authors Jonathan Mordach and Rachel Schneider for their book “The Financial Diaries” for weeks.
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Jeremy is a truck mechanic and he earns mostly in summer and winter. During this time the trucks are much worse. Even in normal times, they take three hundred dollars to their house. This couple is not alone. According to the 2015 Pew Charitable Trust Study, earnings were seen to be at least 25 percent gain or loss from one year to the next.
Financial planners would say that Moores should go to his emergency fund in bad times. This is difficult for high-income households as well as high-earning households. If you are not able to save for an emergency fund, then try to save a certain amount from your earnings. For this, use a savings account or checking.
Creating such an emergency fund is easier than a 6-month fund. You do not need to save much money, because instead of meeting expenses, our aim is to fulfill temporary earnings.
Method # 4: Save Money You Are Not Spending
You may be saving more due to cancellation of all things like vacation, gym. Many people have also reduced credit card swiping. Fewer ways to spend money can also be a good thing.
If you are spending carefully then stopping your spending paths can help you in bad times. Maybe this time you are not going on vacation, so keep your remaining money instead of spending on something expensive. The possibility of going nowhere, spending less is quite possible during this time.
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