The recession may have subsided in the West but the financial difficulties of our average household show no signs of improvement. Forget the poor or the middle class families, even the upper-middle class families have been affected by unprecedented inflation. For the past few years the price of every item of common use, be it petrol, flour, rice, vegetables or meat, has been on the rise.

Though it is becoming very difficult to meet one’s monthly expenses, especially for those with a fixed income, there are ways to better handle the difficult situation. With a little bit of planning and common sense, you can manage your monthly expenditure in a much better way.

One has to understand that there are two types of expenses: One, those over which you cannot exercise any control, for example, expenses like house rent, school fees, insurance premium, car lease, etc. which are known as ‘fixed expenses’ and have to be borne every month. The other, those expenses which you can attempt to control.

Most of the science of home budgeting and controlling your expenses hinges on getting your priorities right. Naturally necessities take priority over luxuries. Spending money on food and health takes priority over spending on things like recreation, changing your cell phone, or buying fashion and trendy items, etc.

The starting point for managing your expenses is determining your monthly disposable income. Disposable income is the portion of your income left after taking care of all your fixed expenses and routine monthly bills. This is the income you can spend on luxuries, but that too needs to be planned.

Based on your past experience, allocate a certain portion of your disposable income for each expense type; for instance, you can allocate 50 per cent of your disposable income for food items, 20 per cent as travelling expense, 10 per cent for recreation and so on. Make sure not to exceed the maximum limit you have set aside for each expense. Worksheets and templates of budgets are readily available on the internet, which can be modified to suit your purpose.

It always pays to save a certain portion of your monthly income. Though it may be very difficult, it’s not impossible.

“I always resist the urge to spend on anything other than the essential items,” says Irfan, an office clerk. “Whenever I am faced with a decision about spending on some luxury item, I ask myself: “Can my family and/or I manage without this?” As long as I am not compromising on the health of my family, I never spend on anything that is not really needed. It is only by following this policy that I manage to meet my expenses with my limited salary; and even save a little bit for the future”.

We should all try to follow Irfan’s example as far as we can. It is best to keep our hard-earned cash in our pockets as much as we can. This gives a strong base in meeting our expenses.

The next important step is to try to reduce your utility bills, by saving on the use of electricity, gas, phone and water. The same goes for the use of petrol and CNG. You cannot control your fixed expenses but you can always control non-fixed expenses by limiting the use of things that can be controlled.

Items of regular and routine use should be bought in bulk as large packages cost less than smaller packs. “It is always good to make a monthly budget and purchase the items of monthly use in bulk,” says Amna, a housewife. “This helps to meet your budget targets and you can use the items in an efficient and effective way. One can go to retail stores or Sunday bazaars where these items can be bought at reduced prices as long as the travelling costs involved are not too high. One also needs to save a little amount every month for non-routine items like winter clothes, yearly taxes, etc. that are necessary. One of the best ways to do that is to contribute in a monthly kitty that pays your contributed amount after a certain time.”

Following are some important tips to further manage your budget:

* It pays to record each day’s expense. This will help you ascertain whether the budget targets are being met, and provide the base for future financial planning and decisions.

* Avoid late payment penalties by paying bills on time.

* Avoid debts. If you already have debts, then make sure to pay your debt instalment on time so that debts don’t pile up.

* In case you have long-term goals like buying a new car or your own home, then try to set aside a certain amount each month to achieve your goal.

* Ideally, at least 20 per cent of your monthly income should be saved. The saying goes “Do not save what is left after spending, but spend what is left after saving”.

In today’s times of financial distress, following the above mentioned principles of managing your monthly expenses will help you to avoid financial troubles. Follow them and see, how in time, you will make your money stretch further.