January 14, 2008

Budgets

Having just realised that my budget is a more of a mess than it should be, I’ve been having a look at personal finance sites and blogs and am amazed that there are so many of them. The funny thing is that none of them seem to say anything spectacularly different. And most of them seem to deal with getting out of debt, not ensuring that you don’t get into debt in the first place or telling you how to ensure that you have a financial cushion which (especially if you tend to develop 'paranoia' like me even when you’re not in the red) is important.

There is one post which I loved though at Millionaire Mommy Next Door which speaks of how our lives are the stories we ourselves create and which contains a link to an article on Hackyourself.org which I loved.


I’m not sure there are many rules to personal finance though. Earn more, spend less? The one golden rule which should ideally see you through. I remember a friend once telling me that her dad always said that it doesn’t matter how much you earn. Even if it’s 1000000 during any particular length of time, the moment you spend 1000000+1, you’re in trouble.

I suppose ‘Step 1′ is to figure out how much money you have, what you want to do with it, and what you want to spend on. Usually, I follow some pretty simple rules when I buy stuff. I simply ask myself a few questions:
  • Can I buy this cheaper elsewhere?
  • Do I need to buy it first hand? For example, much as I love Georgette Heyer, there’s no way I’d buy her books from a shop which sells it at full price?
  • Is it likely to be on sale in a few weeks? Can the purchase wait till then?
  • Do I need it or do I just want it?
  • If it’s just a ‘funky’ buy that I don’t plan to use more than once or twice, can I forgo buying it altogether? Alternatively, can I compromise on quality and pick up something at a lousy store which will last for a month or two: long enough for me to be able to get over the item? Try chunky funky street jewellery, for example. Why would you pay a mint for a brand?
  • Do I need to buy it at all or can I make it for much less money? It makes sense to do this for mufflers, for example, since knitting them costs about 1/5th the price and it helps that I love knitting.
  • Can I buy presents in advance when I see something that a friend will like instead of shopping for something horrendously expensive (and usually not too great) fifteen minutes before a birthday party?
  • Is it going to add to clutter?
  • Will it help me save money? A gadget to picot saris, dupattas, scarves etc. is an investment which doesn’t cost much and saves a lot of money in the long term.
  • Is it better to buy a few really good pieces of whatever it is instead of buying large amounts of rubbish frequently; I love my silks and they’ve lasted years unlike cheaper items which rarely last more than a few months without falling apart.
  • Can I get an old item? It works for me: I love flea markets and have got some beautiful pieces there. Handmade brass trinket boxes, for example.
  • If it’s electronic, what are the features which I need and what are those which I’d like?What’s the cheapest model from a good company? If I’m shelling out a few thousand, I’d rather pay quite a bit extra for something good than buy something which might conk out in a short while and cause me to lose all the money I put into it.