Lesson 1. Managing the expenses

As promised, but one day late. Before starting with the lesson 1, there are three habits you need to inculcate in yourself, if you want to become rich and wealthy. Discipline, consistency and Sincerity with yourself. Without these habits, it will be very difficult to be wealthy. I start with the very basic step of managing the expenses. Everyone writes some kinda "accounts". Whenever I spend for any necessary items(also unnecessary items) I write down the amount. In short, record it. After one week, I do some balancing act. What's that?? I deduct the amount I spent from the amount I had in the beginning of the week. This happens every week. I do all that stuff on excel. If you see carefully the above picture, you will observe that the expenses are categorized in two classes: Budgeted expenses and non budgeted expenses. Generally, budgeted expenses are those expense which you expect to occur once in a day/week and you do not know how much amount you will be spending on it. Like Food-stuff, traveling, etc. You can arrive at the budgeted figure by calculation (22 days x Rs 8 per seat in rickshaw) or by using your gut feeling! Un-budgeted expenses are those for which you need no budgeting. Such expenses may happen suddenly, unexpectedly. Or in some cases you may know the amount and the period when you will be paying. Like Railway pass in my case is non- budgeted as I take a quarterly pass. So it happens only once in three months. I know when I need to buy a pass, I also know the amount I need to pay. I do not require any "budgeting" for it. Now, why undergo such an ordeal? Well, budgeted expenses helps you understand whether you spend within the budget or you overspend. Un-budgeted expenses lets you know how much have your spent on the "uncontrollable" part of you expenses. When I know this I get a fair idea of how my expenses will be in next month. That's the estimation part. We shall learn that later. Over the period you will be able to know the trend of the expenses. Is your actual more than the budgeted? Is your budget increasing every month? etc. Go ahead and check out the new style of expense management. You can make modification in the statement as per your requirement. The above photo is what & how I maintain the expenses. Next lesson will be on "Personal" Finance. It gonna be very personal... P.S. The next blog on finance will be published on Aug 2, 2008 Saturday as next Saturday I'll be busy with YES!+ जय गुरुदेव -- O.A.K. Tree