If there’s one thing that the Covid-19 pandemic has shown us is that the future is always uncertain. Even the most meticulous of planners can’t predict what tomorrow will bring us. That’s not to say we shouldn’t have a plan. Rather, we should have several. Think of it as a range of options for situations that could come up and circumstances that may change. 

A sound financial plan is perhaps the one to rule all plans. After all, keeping expenses down and on track can be hard. In a world that endlessly tempts us with ads for new smartphones and clothing sales, it can be easy to overspend without a budget. This chronic overspending can easily land you in debt; with future dreams of buying a car, house or even going on holiday even more out of reach.

Additionally, emergencies such as job loss and illness can also crop up. Being prepared for the future means making prudent financial decisions now. It involves saving, cutting down on spending and prepping for uncertainties by getting insured adequately. 

Whether you’re getting married, starting a family, or just getting in control of your finances, it’s never too late to start budgeting. Here are our six budget planning steps that make the most of your money, so you can make the most of life.

1. Get adequately insured

Good insurance plans can save you a lot of financial strain in case of unfortunate events cropping up across various areas of your life. A life insurance plan will take care of your loved ones monetarily if you, unfortunately, pass away. Health insurance is essential for you and your family to protect against the huge debt due to medical bills should serious illness or injury befall anyone. Home insurance is a must to protect against occurrences such as natural disasters or burglary. And, of course, car insurance to save you from losses due to vehicle damage from an accident, injury or theft.  

2. Understand and manage your expenses

You can’t plan a journey unless you know where you are starting out. So first, make a list of all your expenditures and account for every single rupee - yes, this includes even what you spend on a cup of cutting chai. Note how much you’re spending on each of those things every month. It may surprise you how small indulgences like an ordered lunch or new pair of shoes add up considerably to your outgoings. Don’t forget to consider quarterly expenses too, such as your  child's education fees, gym membership, and even your insurance policy premiums.

3. Follow money management tips

With smart budget planning, you can divide all your expenses into the following three categories: 

  •  Needs: Things you require to live or unavoidable bills. Food, rent, loan payments, that kind of thing. (Be realistic – you need to eat, but not at fancy restaurants!) 
  •  Wants: Things that improve your life, but don’t absolutely need 
  •  Desires: Things you enjoy, but could easily sacrifice  

Whenever you make a purchase, be honest with yourself—is that thing really a Need, or is it just a Want? If there's something that you want or even desire, like an international holiday, instead of spending money from your savings account, look for short-term investment options.

4. Pay your future self

If you have debts, decide what you can afford to pay off each month—the more, the better. If you don’t, decide what you want to save each month, and make it easy with an automatic regular payment. Your future self will thank you. When you start budget planning, take a look at different tax-saving investment options so you can get high interest on your premium. But before you do that, make sure you create an emergency fund.

5. Create a money-saving plan

Categorise your monthly income into your Needs, Wants and Desires. If after setting aside money to save, your income doesn't cover everything, decide what to sacrifice. Start from the easiest category – your Desires. Then, if you have to, move on to the Wants list– this should only be necessary if you’re in debt, or you have a long list. When money worries are a thing of the past, you’ll be glad you did this. You can also look at different money-saving options such as coupons, sales, and deals before making any purchase.

6. Simplify budget management

Budget planning shouldn't give you sleepless nights. In case you're struggling, use finance management apps instead of a spreadsheet to calculate income and manage expenses. When creating a budget plan, make sure it's a little flexible – especially if you have children. You can also take the help of a financial advisor every few years to ensure that you're on the right financial track.

Finally, if you want everything to go as planned, make sure you're prepared for unexpected changes in your life. Make sure you invest in a savings plan today!