No one wants to sit down once every week and track their spending. However, this is an essential practice to live a good quality, stress-free life. People who build and track their budget spend just right and save more for the future. Most single women, unfortunately, do not consider budgeting seriously and save less than single men of the same age. Here is some financial advice for all the single women out there. Follow these tips and you might be able to make that Europe trip you always dream of.
Build your budget
Take a pencil to paper and start noting down your income and expenses. While you can also use Excel or a budget app like Money Manager, it is best to start off on paper so that you can pay more close attention to what you are doing. Note down your:
Monthly net income
This is your gross income in the UAE. If you lived in a country that charged taxes on your income, you would subtract the tax from your gross income to get your monthly net income.
This includes all your expenses that don’t change from month to month. For example, you have to pay a fixed premium for your UAE car insurance each month. Other expenses in this budget category include rent, utilities, monthly phone bill, WiFi charges, etc.
Yes, you read it right. We are considering savings as an expense. Once you think of your savings this way, you can’t avoid allocating a budget for it. The most important allocation of budget in this category is for an emergency fund. You should have enough in your emergency fund to cover expenses for 6 to 9 months. Don’t panic if you haven’t started doing this. Planning a budget is the first step. Other expenses in this category include money you put in your retirement fund, investments such as stock and mutual funds, any debts that you have to pay off and the amount you want to place in your savings account.
These are expenses that can vary from month to month but are still necessary. These include the cost of groceries, car fuel, clothing, gym membership, prescription medication, etc. It is quite possible, for example, that you spend a lot on clothes at the beginning of a season and not so much mid-season. So, the expense of purchasing new clothes will be different each month.
Here, you should include expenses for items and activities you can do without but would like to spend on. You can use the money in this category for those expensive new designer shoes you saw in the Mall of the Emirates a week ago. You can also think of it as another savings category, especially if you like to travel. Your fun expense could be savings for a weekend getaway trip.
Subtract and evaluate
Now that you have all the numbers down, subtract all your expenses from your monthly net income. The end number will weigh heavily on your next decision. If you have a surplus, hooray! You can choose to save up more or spend some more. You are doing better than most of us. If you are breaking even, phew! We are happy for you and hope you can maintain this streak. If you end up with a deficit, however, you need to go over your budget and cut down expenses in the variables and fun expenses categories. You can even cut down your fixed expenses if the deficit is really bad.
Good habits to develop
Everyone needs to develop good spending habits to be able to achieve a surplus in their budget. Even if you are breaking even, there is always room to save more. The following tips are essential for people who are facing a deficit:
- Try to stay in more. This way, you will spend less on entertainment and gas for unnecessary trips.
- Consider sharing a place with other people to cut down on your rent expense.
- Prepare your meals at home and dine out less.
- Learn to say no to people. If someone wants you to have a night out on the town, for example, and you can’t afford it, say no and stick to it.
- Be transparent about your budget to colleagues, friends and family. This makes saying no easier because people will understand where you are coming from.
- Be aware of the pitfalls of instant gratification. If you are an impulsive buyer, put off buying something you suddenly want for a week (or better yet, a month) before buying it.
- Consider taking the public transport or car pooling. This will also be good for the environment.
- Take input on your budget from a friend or family member who is really good with their finances.
- Take your budget seriously. That means that once you have made it, you need to stick to it. You also need to go back to it frequently to reevaluate it and see where you can do better.
- Engage in comparison shopping whenever you are about to make a big purchase. For instance, if you need to renew your car insurance policy, get quotes from various car insurance companies before signing the papers with one to make sure you are getting the best rate.