Want to save more? Here are 5 easy personal finance hacks for effective budgeting

Budgeting is a crucial process if one wants to save more and spend less. Budgeting gives individuals an idea of how much they are spending and how much they can save. While there are numerous methods that can help you create a budget, ZeeBiz has curated five special hacks that can help you budget effectively, save more, and spend less. 

1 Golden ratio 

This is a simple budgeting hack where one needs to break expenses into the financial timeline of the present, past, and future. Basically, breaking down your monthly spending by calculating how much of your gross income has gone into your past bills, how much is going into your present bills, and how much will go into future savings. To put things into perspective, if you look at your past record of spending, you will understand how much of your income you should allocate to your debt, current spending, and future savings. It can be 20 per cent for past bills, 60 per cent for current costs, and 20 per cent for future savings, so that the ratio can be 20:60:20. This ratio can be customised as per personal preferences. 

2. Cash stuffing

Cash stuffing is a budgeting technique in which you withdraw cash at the start of the month (or whenever you receive a paycheck) and then insert varied amounts in envelopes labelled with specific categories. The idea is that it will keep you from spending more than you have budgeted for that category.

3. Tandem saving and spending 

In this hack, saving and spending go hand in hand. In simple words, save as much as you spend. To put things into perspective, if you have spent Rs 5000 in a week, put Rs 5000 as savings in your weekly savings funds. 

4. Power of pausing 

While shopping online, if an item catches your eye, don’t buy it right away. Put it in the cart for a month or more, and again, review if you really want to buy that item. This hack helps you avoid unnecessary spending.

5. Small savings

To fulfil your medium- to long-term goal, this hack is the best. You need to simply set aside a small amount of savings each month to fulfil the goal. To put things into perspective, if you want to buy a car worth Rs 10 lakh in a year (12 months), then simply divide 10,00,000 by 12, so you will need to save Rs 83,333 every month to reach the goal.

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