How to Budget

The word budget may sound serious now, but in reality, it is just a plan for ones money. It allows you to keep track of how much you are earning, how much you are spending and how much you are saving. Instead of spending all the money, budgeting allows people to navigate their financial journey the right way by making more informed decisions. 

A simple way to start is with the 50-30-20 rule. 

What is the 50–30–20 rule?

Think of your money as being split into three parts:

• 50% for needs

  These are things you can’t really avoid and require for day to day activities like food, transport, clothing, school-related expenses.

  
  

• 30% for wants

  These are the items that you do not require for survival, but you desire them because they add comfort or joy to your life. Examples include Eating out, shopping, subscriptions, vacations, or anything you choose to spend on because you want to not because you need it.

  
  

• 20% for saving

  This is the money you keep for the future for things like emergencies, goals, or investing later on.

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This method prevents two common problems: spending impulsively without realizing it, and saving so aggressively that it feels exhausting. A budget that feels realistic is one you’ll actually follow.

A simple example

Say you have ₹5,000 to work with in a month.

• ₹2,500 goes toward needs

• ₹1,500 is for wants

• ₹1,000 is saved

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Some months you may not be able to split it perfectly due to unexpected spendings like buying someone a birthday gift, and that’s okay. The point is to avoid spending everything without a plan.

How to start budgeting

1. Figure out your income

   Start with how much money you actually receive in a month in the form of salary, return on an investment or any other sources.

   
   

2. Separate your needs from wants

   Be honest here. Needs keep life running. Wants make life enjoyable. Mixing them will only make budgeting harder.

   
   

3. List your regular expenses

   You don’t need to track every coffee you buy, but knowing your main expenses helps you see where your money usually goes.

   
   

4. Check in regularly

   Budgets work best when you revisit them. A quick check every week or month helps you adjust instead of feeling guilty later.

Budgeting may seem like something only adults can do but you can too with any allowance you get! 

Try dividing the money using the 50-30-20 rule. You might spend on necessities like snacks or wants like going to a movie with your friends but also save some for when you might need it in the future like buying a really expensive toy!