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I don’t recollect specifically writing about my budgeting techniques. So here goes.
I used to have a detailed budget for my monthly expenses. I used to put specific targets for each expense item — salaries for domestic help, groceries, eating out, clothing, entertainment, fuel, cellphone bill, utilities and what not. I used to track and chart each expense item in a spreadsheet. But I used to miss most targets each month. Consistently.
I switched to a different system — the BIG picture budget.
Now, I set aside a certain amount of money as my monthly expenses. I dip into this pool as and when I need to meet an expense. Salaries for domestic help and groceries go out within the first couple of days of a month. Everything else happens as and when they happen during the month. What I chose to spend on consciously adjusts during the course of the month. In one month, I might have spent more on entertainment and in another month, I might have spent more on eating out. But so long as I’m within the BIG picture budget, it really doesn’t matter where I spend more and where I spend less.
I’ve been using this system for quite some time now and it works well. I don’t recollect regretting not doing something just because I didn’t have the budget for doing that. And since most of the mandatory expenses happen early in the month, there are no “Oops!” moments towards the end of the month. I also keep aside a teeny weeny buffer, you know, just in case…
Now, how about you? How do you budget?
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