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Keep Money For Fixed Expenses Separate

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Keep Money For Fixed Expenses Separate
Keep Money For Fixed Expenses Separate
Rishad Manekia - 29 October 2021

Queries

Krishiv Thakur, Pune

How should I go about making a monthly budget so that my salary lasts for the whole month? I often find myself struggling in the last week of the month and want to figure this out.

Proper planning and setting up a budget can help you. First, make a note of all your fixed and unavoidable monthly expenses such as groceries, rent, EMIs, utilities, phone, Internet, personal grooming and credit card payments. Then, list down how much you spend on clothing, eating out, entertainment, and so on.

Once you have the list of your expenses, add up the total and look for the areas where you can cut back on spending if you need to.

Once you have a tentative idea of all your fixed monthly expenses, transfer the same amount or a little extra to a separate bank account and use that account only for your expenses. This will help you meet your fixed expenses. Also, avoid digging into your monthly income to make impulse purchases.


Jinsey Jose, email

I started my first job this year in June. Do I need to file income tax returns by next month?

No, you need not file an income tax return as of now, but you may need to file it next year. The income tax return is filed for a financial year (FY) in the following year, which is known as assessment year (AY). Therefore, for income earned during the current FY, i.e., April 1, 2021 to March 31, 2022, you will need to file a return in the AY 2022-23.


Sagar Gogoi, email

Most of my friends use their credit cards for shopping and eating out. I, too, want to start using one. How do credit cards work?

While credit cards have become extremely important, they can also derail our finances if we are irresponsible. Before you opt for a credit card, remember that spending or withdrawing money through a credit card is equivalent to taking a loan. You have to repay within 30-45 days. If you don’t, it attracts high interest rates of 30-40 per cent per annum, and your creditworthiness gets affected which can become a hindrance in availing loans in future.

However, a credit card also helps you develop credit history based on which credit scores are calculated.

So, you may go for a credit card, but remember to maintain strict financial discipline and do not overspend. Keep checking outstanding dues against your credit card on a regular basis, especially before making big purchases.


Putul Gunjan, Indore

I earn Rs 30,000 per month. I have read at many places that one should start saving early. After paying for all my utilities and expenses, I will only be able to save about Rs 1,000 per month. Does it even make sense to start saving such a small amount?

One should never think that a small amount is a barrier or that it does not make sense to start investing with. In fact, it is better to start with a small sum of money and get into the habit of investing. Once you become comfortable and have a fair idea of investment avenues, you can eventually enhance your investment amount. Also, remember that a small amount invested now can also grow exponentially over the long term, thanks to the power of compounding. So, start investing as much as you can; factors like amount and age are secondary.


Rishad Manekia, Sebi-Registered Investment Advisor, and Founder and MD, Kairos Capital

Queries
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