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  • Writer's pictureMrudula Muralidharan

3 simple steps to start budgeting

Budget like a pro

Having a budget is an essential first step in effectively managing your personal finances. A budget aids in recognising your requirements, setting an upper limit to avoid splurge spending, creating space for savings and hence creating an workable plan for your income for a comfortable life

But, What is a budget?

A budget is essentially a list of all expenses categorised for clarity, which is possible to be achieved with a set level of income. It is a framework within which your spendings and savings should move month over month.

Each budget plan lasts for around a year. So when you make a plan think about the present and one year from now – it can either be a calendar year or a 12 month period based on your work contract.

So, how do you start budgeting?

There is no one formula that fits all. But I have put down easy steps using a simple method of categorisation that will get you started with budgeting with ease:

1.     The first step is to list down all your fixed expenses – rent, council tax, bills, loans, childcare costs, telecom subscriptions, fitness memberships & professional subscriptions. These are direct debit payments which rarely changes over a year.


It is always better to pay your bills on a monthly basis rather than quarterly or annually – you will have a regularity. 

As you list them down write a figure beside it and be sure to do a check – what is the required limit for you to lead a comfortable life? Is it going over what is essential? Generally, it is ideal to have your fixed expenses within 50% of your income.


2.      Then we move on to variable expenses – groceries & provisions, commuting expenses & entertainment – yes do budget for entertainment.

We all need a restaurant or two a week, a movie a month, a day trip a month. But remember, in a budget you need to set an upper limit.


3.     Now that you have put down all your expenses, it is time to see what is left behind and set aside for savings & charity. It is best to have 20% of your income towards this category to allow for resilience.


These budgeting tips should give you a good idea on starting off with your personal finances. And it is during budgeting that you will understand more about yourself and your short term goals.

So take the first step today and empower yourself to have a fulfilling life for years to come.

Written by,

Mrudula Muralidharan

Founder & Financial coach, Million goals

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