Fuel prices have risen sharply in India in recent months due to rising global crude prices. What is more worrying, however, is the fact that rising fuel prices are not only impacting the country’s economy, but also household budgets, creating new challenges for everyone. .
âWhen oil prices go up, the impact on gasoline and diesel prices is just the most visible and immediate repercussions. There are (however) more important implications for macros like inflation, interest rates, the trade deficit, the rupee exchange rate, and foreign exchange reserves. It is this strong downstream impact of oil that makes it a big challenge for the economy and also for the budgets of individual households â, recently stated a research report from India Infoline.
Although managing her household budget becomes a challenge, especially in times like these, however, where there is a will, there is a way. Here’s how to do it by just following a few simple tips:
1. Track every expense
List all paid purchases and invoices. Keep very close track of all credit card, cash and debit card purchases. âBy tracking every expense down to the penny, you’ll quickly see where you’re spending the most money. This will force you to consider cheaper options, âsays Anil Rego, Founder and CEO of Right Horizons.
2. Reduce unnecessary expenses
Your utilities, home loan or rent payments, and medical bills are necessary costs. However, snacks, evening coffee, movie tickets, and restaurant meals are not as necessary. Draw a line between essential expenses and other expenses. When your budget is tight due to rising prices, you need to cut back on unnecessary expenses one by one.
3. Increase income
If your income is considerably more than your expenses, you are ready to face any increase in costs. But, for most of us, that’s not the case. Our revenues barely cover expenses or, with rising prices, do not cover costs. âIf all of your expenses are necessities and your income is still insufficient, you have increased your income by pursuing a vocation, doing self-employment or part-time jobs on the weekends,â explains Rego.
4. Go for lifestyle changes
Income from a part-time job can make the difference in managing your budget. But in an economy that isn’t growing as fast as it should, it will be difficult to find well-paying part-time jobs. Therefore, implement lifestyle changes. These can include using less energy for cheaper utility bills, driving your car fewer miles, buying cheaper products while grocery shopping, and more.
5. Decrease in debt outflows
No more than a third of your income on hand should be used for debt service. Whether in normal times or in times of rising prices, paying down debt takes a fixed part of the money. âTherefore, it is important to reduce your outflow of debt to a manageable level. Don’t continue to get into debt with an increase in income. Try to save at least a third of your net income. This will help you overcome the phases when your budget faces challenges, âsays Rego.