This simple 3-step method will help you feel in control of your finances

How to gain peace of mind but still afford everything you need at this time of year.

Everyone worries they are not saving enough and spending too much at this time of year. With wedding season in full swing, there are new outfits to buy, gifts to choose and travel to plan. Add to that the festive parties and Secret Santa’s and it’s not difficult for your spending to feel out of control.

And when you start over-spending, its not easy to stop. What’s one extra outside meal this week when you have to buy that expensive wedding outfit anyway?

So how do those people who always seem to be cash flow positive manage it? What are they doing differently to achieve financial nirvana?

They follow a few simple rules, that everyone can. And they stick to them.

1. Make a budget

All the most financially savvy people create a monthly budget. This is the easiest and fastest way to feel on top of your spending.

Start by making a list of exactly how much money you spend per month on the essentials (rent, travel, provisions, electricity, re-charge). Look at averages over the year to assess the accurate cost, working out the average over 3 months for costs that do not occur every month. These are your non-discretionary spends.

Then create categories of discretionary spends, such as “gifts”, and plan an upper limit per month. Try hard not to overspend here, this is where you will need to economise some months.

The idea is to make the budget balance, with your total expenses less than your total income. In any given month, you may not spend all of your discretionary budget, but that money can be rolled to the next month to allow for lumpy periods.

2. Spread the cost

But how do you budget for a new laptop, AC or furniture under this plan? Won’t one big purchase blow the budget and make the exercise pointless?

These days even your biggest purchases can easily be split into Equated Monthly Instalments (“EMI”) making your spending smoother and more predictable. EMI plans are how people afford their own home and cars.

Individual stores now offer EMI plans for most budgets but we all know the best deals are usually available on-line. So how do you avail the same EMI plans in your digital world?

One option is to use a service like ZestMoney. These services allow you to pay online with your favourite stores, and split the cost over up to 24 months. They do not require you to have a credit card, and will usually set up your account on the basis of your KYC and bank statement.

ZestMoney is one of the easiest services available — with instant approval, a small upfront payment and minimal paperwork.

By splitting your large purchases into monthly instalments, you can make the biggest expenditures fit into your monthly budget, and ensure you don’t break the budget mid-month, then enter into the spiral of over-spending.

3. Review and Revise

The most financially savvy people, don’t stop here. They also regularly review their spending and keep the budget fresh.

Use an expense tracking app — many are now available for free. Keep track of your major spending to check that the budget actually makes sense. You can update the numbers a few times in the first three months but then try hard to stick to what you have predicted.

If you follow these three steps, it won’t be long before you regain control of your spending, and feel in a position to predict your monthly savings.

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