Miscellaneous

Improving Financial Management

Recently, the dollar has seen unprecedented rise in its rate against the rupee of today. This devaluation of the currency will surely cause inflation! Undoubtedly, the most challenging task we all have to face, eventually, is managing our inances. It is hard sticking to the budget as with the annual national budget, our salaries do not go up on a scale as high as the prices of all the commodities. Well, same goes for our hazaron khwahishen. In the quest to have those velvet/suede sofa sets and expensive silk handmade carpets that adorn every sitting room, from flaunting high-end fashion brands to the craze for Huda and Chanel cosmetics and comparison of what automobile one possesses, everyone is in a dilemma of Keeping up with the Joneses. And then we fall head on into the inevitable, which includes soring-high-in-the-sky tuition fees and not so shockproof electricity bills. Buddy, that’s one sticky swamp I am stuck in, aren’t I?! Mirza Ghalib so aptly said:



Hazaron khwahishen aisi ke har khwahish pe dum nikle
Bohot nikle mere armaan lekin phir bhi kam nikle

So what’s the way out or more precisely, how do I get out of it? Should I just shut myself out from all this bandwagoning? Well, ideally I should! But I am far from ideal. And I do not yet intend to start living a life of a hermit and cut off from everything. What I can do is make it a bit simple and cut a few rough edges here and there for myself and my family at the very least.
Putting the most important attribute of ‘adopting simplicity’ on hold for a while, I shall leap directly to the issue at hand. So how do I manage my budget? As a matter of fact, I have actually been putting some serious efforts to solve this problem and the good news is it has paid off.

Jump starting with the course of action step by step right after receiving pay check:

1. Zakat
I, personally, start off with Zakat. Cleanse it all. Religious obligation first! I get a feeling of it all being cleansed after paying Zakat.

2. Save
As easily it struck me the first time I read it; I actually had a hard time implementing it. But it’s totally worth it.
“Do not save what is left after spending; instead spend what is left after savings.”
— Warren Buffet

Initially, it is always hard to stick to savings when you are trying to contain yourself within the budget but with time and consistency, the habit pays off. You can start with as little as 10% of your income to begin with. Do not start on a too high percentage, so that you find it difficult to cope with expenses by the end of the month. And now, vow not to touch it. Keep it for rainy days or for a trip you plan or the bulk school fee dues at the start of your child’s new school session. Just make any excuse to yourself with it but do not touch it! Better yet, get saving bonds with it and keep them somewhere you are too lazy to reach.

3. Chart your budget
After putting aside some savings, make your budget and stick to it. It is the biggest tool that will help you succeed financially. A budget will also help you decide how to spend your money over the coming months and years. Make a list of all the items you have to take care of throughout the month. Bills, loans, debts, installments, fees, transport (fuel), groceries. Jot them down.

4. Separate needs from wants
It is important to distinguish between needs and wants. Be honest to yourself because you really need to prioritize the things you cannot do without and write those first. These are your needs. Next, if it pleases you, you may jot down your list of wants at the flip side of the paper. But remember that you can do without your wants. 



5. Pay off debts and bills
Now start paying off your debts, loans, installments, school fees, bills – all of the inevitable. The bulk has gone here and now you want to ask, so do I still save? Yes, you still do. If you pay your debt first and put no money in savings, the downside is that you’ll have nothing but your credit cards or loans to fall back on if you have a financial emergency. If you are in too much of a financial crunch with high interest rates, in that case, you may cut your savings by half. But it isn’t wise to put off either of these in lieu of the other so devise a way that you can split your money between the two. For example, if you have an extra Rs.1000 each month put Rs.500 towards your debts and Rs.500 towards savings. You may pay a bit more interest but you’ll have peace of mind that comes with having money in reserve to keep you out of the debt cycle.

Try these tips to pay off debts/installments more quickly:
a. Sell unused or unwanted items around your house to find extra money to add to your debt repayment plan.
b. A second job/online job may help speed up the change to your situations.
c. Look for areas in which you can cut your budget to increase the cash available for your debt payments.

6. Adopting Simplicity and Sufficiency
Simplicity means simple and uncomplicated. Self-sufficiency is an intersection of self-care and minimalism. There is no end to a man’s desires. We have put behind the golden preaching of our Prophet Muhammad (PBUH) of practicing a simple lifestyle. We must realize that this quest for extravagant is never-ending. Rise above the superficial lifestyle. Feel comfortable in your skin. While we must learn to be contended with what we have; it is healthy to treat yourself once in a while. Indulge in something creative. Invest on personal growth.
As you become more fluent in the habit of managing your money effectively, your plan will feel natural and develop into a part of how you do things in your household. Some of the steps may blend together at times or you may add up a step or two to make it easier for yourself.

Life happens; give yourself permission to make changes that benefit you and your family. Having a plan with a solid foundation will allow you to come out ahead with ease and contentment. Good luck! HH


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