Benefit From Kaytek's Personal Finance Management Tips
For one of our individual customers, Kaytek suggested some Personal Finance tips on Raising Incomes and Controlling Expenses.
For Raising Incomes, possibly the following ideas could be useful.
Try to classify future incomes either individually or jointly for all the members of the household on the following lines :
Financial Instrument Incomes (Only Fund-Based)
Shares - Dividends Income
Shares - Capital Appreciation
Hundi (Bills of Exchange) - Interest Income
Other Financial and Savings Instruments - Interest Income
Professional / Business Incomes ( Primarily Personal Expertise and Experience Based, may or may not need funds )
For each of the above sources of income, work out a possible risk / return analysis based on three possible scenarios
Again the same can be done either individually or for the combined household incomes for all the family members.
For Cutting Expenses, possibly the following ideas could be useful.
Expense Budgeting is a very useful technique to organise personal finances.
Since Incomes are always more difficult to raise, suggestions for expense budgeting are as follows :
Classification Of Expenses - Classify all average expenses of say last 3 months into different types - e.g.
Food / Grocery
Telephone - Fixed Line
Telephone - Mobile
Books, Magazines, Periodicals
Leisure - Movies, Plays
You could do the same either individually or combined for the entire household.
Then against the major items that have made up the above expenses, classify these expenses as Essential and Non-Essential.
It may be a good idea to try and reduce / eliminate the Non-Essential expenses over the next 3 months, till the Income side gets stabilised properly.
Zero Based Budgeting - ZBB techniques can also be used to look at all expenses afresh (i.e. with a zero budget) and then work upwards to arive at fresh cost estimates. ZBB is a very popular cost cutting technique.
Again, joint discussions and planning amongst the different family members is the key for effective personal finance management.
There are widely available Microsoft Excel / Google Spreadsheet templates & Web Based Open Source Tools for Expense Budgeting and other Personal Finance Management techniques.