Track your expenses.
Start by making it a habit to track all your expenses, large and small. note down your rent, insurance premiums, EMIs, house-help salary everything. Also start noticing the patterns of dinning out, shopping , ordering inn, monthly grocery expenses, medical bills and everything else in between
Now, Divide all your expenses into 2 parts: necessities and luxuries
Necessities will include things like rent, EMIs, grocery , medical bills staff salary. Basically the expenses that you can not afford to avoid for the entire month. And luxuries shall include things like shopping and dinning out, basically everything you can absolutely avoid if you happen to run on a tight budget.
Divide your monthly budget into 3 parts
Divide your monthly budget into 50-30-20. 50% for your necessities, 30% for your luxuries and 20% for SIPs and Insurance. If your SIP amount does not match, I suggest you adjust it to make upto 20% of your income.
If your necessities or your luxury expenses take up more space than needed, I would highly suggest that you adjust your expenses and your lifestyle to fit well into the bracket. So that you have room for financial planning in the long run.
