Every day we pay for numerous commodities. Some of these are essential like staple food, whereas some are luxuries like dining in a five-star restaurant. What we usually fail to do is to keep track of the difference between our expenditure and earnings. In this way we either end up using all our income (means; zero savings) or worse tied up in debt.

So how can we control our overspending habits while also comfortably meeting our needs?

• Organizing our financial records is the first and the most significant part of budgeting. Without this step, we will never know when and where our money goes. These records can simply be hand-written in a personal diary or typed in ‘Notes’ in our cell-phones at the end of every day. Another way to record expenditure could be by using applications like www.mint.com. These innovative apps are super easy and time-saving. Moreover, you will be surprised as to how much money could’ve been saved if some unnecessary purchases were avoided.
• What comes after organizing records, is categorizing each purchase. For this part, question yourself. Was this purchase a want or a need? Was it worth the price? Could it be avoided or delayed? This way you will end up with two categories; 1) your needs without which you can’t survive and 2) your wants which are simply your never-ending desires. After completing this step, reduce your ‘wants’ list and see the change in your savings.
• The third element here is to minimize the use of cards. When we use payment cards, like debit and credit cards, we usually end up spending way more than we had initially planned. For example, when you go out to buy a new dress with Rs. 5,000 in your wallet, you will buy something under this limit no matter what. On the other hand, if you have a payment card you may lose self-control and even purchase a dress costing Rs. 6,000 just because you like it. This way your planning will be hampered and you may fall out of track.

Even though budgeting can be a bit challenging, these 3 basic steps are very easy to carry out as a part of our daily routine. On top of that, you will be startled at how quickly this will improve your financial performance.