How to Squeeze the Most Out of Your Household Budget

4 Ways To Squeeze More From Your Budget

In financial planning, one of the biggest challenges is how to squeeze the maximum savings out of your income. Remember, savings never happen on their own, you have to make it happen. That means, you must first set target savings per month and then work your expenses backward. Therein lies the catch. Most of us believe that our family budgets are sacrosanct and cannot be changed. That is not true. If you closely look at your family budget, there would be several leakages. Tightening the family budget may look like a very prosaic affair, but you will be surprised at the eventual benefits that it can proffer. Here is a quick look at some ideas to squeeze more out of your household budget.

Stop overpaying for routine expenses

The one thing we often ignore is the size of our grocery bills. You would be surprised to know how much of savings you can squeeze out of them. For instance, buying groceries in bulk can help cut costs substantially rather than in a piecemeal fashion. Also, you can save a lot by ordering groceries online. You would be surprised at the quantum of discounts you can actually extract. Another area we spend loosely is transport. Why take a cab or your own car when a metro is not only cheaper but also more efficient. In fact, developed countries are not judged by the number of cars on the road, but based on the number of people taking mass transport. That is true of places like Singapore and Hong Kong.

Make the most of coupons and attic sales

It is a fact that when you eat out in an expensive restaurant, you end up paying more for the ambience than for the food. Visiting such places frequently, means you are paying repeatedly for the same ambience. Look for coupons and discount bargains. In an era of eager wallets and banks looking for a bigger wallet-share, you can almost get coupons every time. Keep a record of these coupons and make the best of them. You will be surprised at how much you can actually save. Also, don’t miss out on bargain sales and clearance sales. The legendary Warren Buffett himself said that investors should apply the same logic to a stock purchase as to a bargain sale. Here we are asking you just make the best of attic sales. You will be surprised at the value for money you can extract.

Deal with your insurer and banker more smartly

Here is a basic rule. When it is time to renew your insurance policy, don’t just blindly send the cheque for the renewal amount. Go to the website of an online aggregator and compare insurance policies. You would be surprised that you can get policies with similar features at a lower premium. This can best applied to car insurance, asset insurance etc. Instead of annual premium payments, go for more frequent premium payments so the bunching can be avoided. Keep a tab on your bank charges. You can save a lot of money by maintaining minimum balance or convert it to a zero balance account. You will be surprised at how much you would eventually save at the end of the month.

Use your credit cards more prudently

How to make the best of your credit card facility. Firstly, to the extent possible, treat your credit card like a charge card, so you save on the steep 3.5% interest a month. Be wary of annual charges and opt for a card where such annual charges are waived off. Avoid the revolving credit facility, as you will end up paying steep costs. Keep a rule that EMIs put together must not exceed 40% of your take-home income. Above all, make the most of payback points, free tickets, discount vouchers and don’t let them expire. All these can go a long way in reducing your costs in a tight budget scenario.

There are other mundane ways like cutting down on your power bills, consolidating  your telecom bills, shifting to a wi-fi broadband connection etc. The moral of the story is that most of us underestimate the most basic building block of savings, which is the household budget. That is where you must start.