Unravel the mysteries of financial forecasting and safeguard your savings from unexpected downpours of expenses!
As we are in the mid-rainy season, let’s discuss something that affects us all: budgets!
Imagine you have a monthly budget – a sum you set aside for your expenses. But here is the thing: our expenses are similar to the weather. They can surprise us with sudden showers of unexpected costs.
Sure, we have our regular expenses, like rent, bills, and groceries – like the consistent drizzles we expect throughout the year. But, some timely expenses sneak up on us, like sudden rains on a clear day. For instance, during June and July, parents have to factor in the cost of annual or half-yearly school fees and other rainy-day needs, which takes up a huge part of the monthly budget. And when November rolls around, Diwali festivities bring the need for new clothes and gifts. So, as months change, your expenses will also change.
It is easy to overlook these expenses and think our budget remains constant. But if we forget to include them, we might feel caught in the rain without an umbrella.
The good news is that we can avoid this by being a bit more flexible with our budgets, and you can adjust your budget to accommodate these timely expenses. Doing so will make you better prepared to face the little financial surprises that come your way.
So, today, let’s learn the skill of financial forecasting so that you can factor in unforeseen expenses beforehand and lead your life peacefully.
What is Financial Forecasting?
Financial forecasting is like predicting the future of your money in a simple and intelligent way. Just like a weather forecast helps you plan for the day, financial forecasting enables you to prepare for your finances.
To do this, you look at your past money habits and use them to guess what might happen in the coming days. Financial forecasting is helpful because it allows you to prepare for the rainy days when you might need more money.
But remember, it is not about being precisely right but more about having a good idea of where your money is going and how you can plan to make the most of it in the future.
Tips for Financial Forecasting
Analyse Your Bank Statement
Examine your bank statement and analyse your spending habits for a specific month. For instance, June might have rainy season expenses and back-to-school shopping, while December could be a high-winter expenses month. Remember to factor in your birthday month as well. Doing this will prepare you for the month ahead and help you know where you need to spend and how much money you will need.
So, understanding your past spending patterns will help you stay on track with your financial goals. This will also help you avoid surprises.
A quick tip: Keep an eye on sales to save some money. You will thank us later!
Analyse Utility Bills
In certain parts of India, scorching summers demand heavy usage of air conditioners and refrigerators for those refreshing chilled juices. Similarly, heaters become a must-have during winters, adding to expenses.
Now, while you are budgeting for these seasons, it is wise to be a bit cautious. For example, considering higher electricity bills than expected can help prepare for surprises, like the recent talk about unexpectedly high bills during the summer.
By factoring in a little extra, you can stay ahead of the game and keep your budget cool and comfortable.
Remember the good old days when our mothers kept an envelope or a small purse for the monthly grocery money – it is a smart way to budget!
Times have changed, but the idea still holds true. Nowadays, you can use digital wallets like Amazon Pay or Paytm to keep your grocery money safe and sound. This way, you won’t overspend and will have a mental reminder to stick to your budget limits. No cheating allowed – only use the wallet for groceries!
And speaking of seasons, keep an eye out for changing prices. When the rainy season comes around, fruits and veggies tend to get a bit pricier. But in winter, they become more affordable. So, remember to factor in these price fluctuations when planning your budget. Doing so lets you keep your grocery shopping on track, no matter what the weather brings!
We know; we just spoke about using a digital wallet because it is something everyone uses nowadays. But you can also use cash instead of a digital wallet because it puts constraints on our minds as we see real money. Cash has built-in discipline as it is visual.
So, the next time you work on your budget, remember to factor in those occasional expenses. It is like adding a dash of practicality to your budget. With a little foresight and willingness to adapt, you can breeze through the expenses without getting soaked in unexpected worries.
*The article is for information purposes only. This is not an investment advice.