READER REPORT:

Home budgets: sacrifice and spreadsheets

SRIDHAR EKAMBARAM
Last updated 05:00 04/01/2014
budget
WORK IT OUT: Making a budget means factoring in all the little things.

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We asked our readers to share their budgeting tips. Sridhar Ekambaram says it's all about sacrifices and spreadsheets.

I have a simple home budgeting system using a spreadsheet for yearly planning.

First, I identified paydays and expected pay each payday to find out what the income flow would be each month.

Next, for each month I estimated expenses. Essential monthly expenses like power, rates, groceries, vegetables, and the credit card were manually averaged based on past bills and estimated for each month.

Then I added things like insurance and when the premiums were due.  

Most importantly, I estimated mortgage payments for each month.

The idea is to keep all expenses except mortgage payments to minimum.

We also set aside the cash equivalent of four to six months of one person's salary as a buffer in case of job loss. This is separate from money set aside for emergencies like medical costs.

Of the remainder, a big part goes into savings plans, mainly term deposits or our son's university costs. Luxury expenses are then identified based on surpluses after all this.

We have made several sacrifices on the way. For example, we decided we didn't need big luxury cars, or multiple televisions in the house. We manage with one family car, public transport and only one television for everyone in the house. The car is 15 years old.

We also decided we didn't need to change cars every few years just because there was newer one in the market. We just spend a smaller amount each year to keep it in good running condition.

Be ready to make sacrifices to achieve financial independence. Your social position will not be degraded just because you don't have those big ticket items.


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