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Raising Incomes, Controlling Expenses

Benefit From Gray Arrow Kaytek's Personal Finance Management Tips

Down Arrow For one of our individual customers, Kaytek suggested some Personal Finance tips on Raising Incomes and Controlling Expenses.

Down Arrow For Raising Incomes, possibly the following ideas could be useful.

Gray Arrow Try to classify future incomes either individually or jointly for all the members of the household on the following lines :

Down Arrow Financial Instrument Incomes (Only Fund-Based)

Gray Arrow Shares - Dividends Income

Gray Arrow Shares - Capital Appreciation

Gray Arrow Hundi (Bills of Exchange) - Interest Income

Gray Arrow Other Financial and Savings Instruments - Interest Income

Down Arrow Professional / Business Incomes ( Primarily Personal Expertise and Experience Based, may or may not need funds )

Gray Arrow Business Salaries

Gray Arrow Professional Salaries

Gray Arrow Business Profits

For each of the above sources of income, work out a possible risk / return analysis based on three possible scenarios

Gray Arrow Pessimistic

Gray Arrow Realistic and

Gray Arrow Optimistic.

Again the same can be done either individually or for the combined household incomes for all the family members.

Down Arrow For Cutting Expenses, possibly the following ideas could be useful.

Expense Budgeting is a very useful technique to organise personal finances.

Since Incomes are always more difficult to raise, suggestions for expense budgeting are as follows :

Gray Arrow Classification Of Expenses - Classify all average expenses of say last 3 months into different types - e.g.

Gray Arrow Electricity

Gray Arrow Food / Grocery

Gray Arrow Clothes

Gray Arrow Cable Television

Gray Arrow Telephone - Fixed Line

Gray Arrow Telephone - Mobile

Gray Arrow Transportation

Gray Arrow Books, Magazines, Periodicals

Gray Arrow Leisure - Movies, Plays

You could do the same either individually or combined for the entire household.

Then against the major items that have made up the above expenses, classify these expenses as Essential and Non-Essential.

It may be a good idea to try and reduce / eliminate the Non-Essential expenses over the next 3 months, till the Income side gets stabilised properly.

Zero Based Budgeting - ZBB techniques can also be used to look at all expenses afresh (i.e. with a zero budget) and then work upwards to arive at fresh cost estimates. ZBB is a very popular cost cutting technique.

Again, joint discussions and planning amongst the different family members is the key for effective personal finance management.

There are widely available Microsoft Excel / Google Spreadsheet templates & Web Based Open Source Tools for Expense Budgeting and other Personal Finance Management techniques.

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Updated on 18th January 2010.
Created on 16th January 2006.

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