Also Read: Here are 10 Cost Cutting Steps

Envelopes

Chitra Srinivasan says, "I allocate money for different expenses of the house like grocery, servant's payments, children's fees and so on a fixed date of the month. I put the fixed amount for each in different envelopes and keep them aside with proper labelling."

Apart from that, she keeps a separate envelope called emergency with some extra cash. This helps when there is a sudden price increase in any of the allocations or if there is some unexpected expenditure.

List the Expenses

If you do not have an idea about the household expenses, you can also make a list of fixed expenses. You can keep ticking them off as and when you are done with that respective expense. The amount that is left after paying off the fixed expenses can be kept for an emergency fund and the rest can be invested.

Maria Vaz, working in a telecommunications company says, "I pen down all the expenses in my diary. This helps in tracking our expenses. I make sure that after considering the price fluctuations the expense does not go beyond a certain limit.

Writing in a diary helps me with referring for the next month's expenditure."

Track Daily Expenses

Apart from planning your monthly budget, you can also maintain a daily expense record. This will help you in cutting down unwanted expenses. You can either do this by maintaining an excel sheet on your computer or simply by noting down in a diary or a note book.

Cutting down the unwanted expenditure is very important because if you overspend on a daily basis, the entire month's budget can go off track and the next month's budget may also get affected due to insufficient funds.

Keep Aside Money for a Rainy Day

Milu Vaishnav does the budgeting in a very different way. Whenever the income of the house comes in, she keeps aside 10 percent of the amount for a rainy day and 30 percent for purchasing the essentials. Another 10 percent is kept for paying the bills and the rest goes for investments.

You need to remember that the most important thing in budgeting is to have a positive habit of putting in the correct amount and tracking your expenses properly and regularly.