Savings and Budgeting
How to Budget for Monthly Expenses in Nepal: A Comprehensive Guide
Apr 26, 2023 - 2 min read
Earning and managing money in Nepal can be challenging due to limited income and high inflation. However, creating a budget can help you feel more in control of your finances and make it easier to save for your future goals. In this guide, we'll walk you through the steps to budget for your monthly expenses using the 50/30/20 rule.
Step-1: Calculate Your Net Income
Start by adding up all your sources of income for the month. Your net income is the money you receive after deducting all necessary taxes, provident fund, retirement plans, and insurance. Don't focus on your total salary because that can lead to overspending. If you're self-employed or a freelancer, keep detailed notes of your contracts and pay to manage your irregular income.
Step-2: Track Your Expenses
Track and categorize your expenses to see where you're spending the most money and where you can cut back. Make a list of all your monthly expenses, including fixed expenses like rent, utilities, insurance, and debt payments, as well as variable expenses like groceries, entertainment, and transportation. Allocate a budget according to the prices of goods and services in Nepal.
Step-3: Set Realistic Goals
List your short-term and long-term financial goals. Short-term goals should take around one to three years to achieve, while long-term goals can take decades. Identifying your goals can help motivate you to stick to your budget.
Step-4: Consider Cultural and Social Expenses
Budget for cultural and social expenses like religious festivals and family gatherings. Include these expenses in your budget plan to allocate money from your total income for proper management of your monthly expenses.
Step-5: Make a Plan
Use the variable and fixed expenses you compiled to get a sense of what you'll spend. Set specific and realistic spending limits for each category of expenses based on your net income and priorities. To minimize unwanted expenses, differentiate between needs and wants. Adjust your spending to redirect money to financial goals.
Step-6: Adjust Your Spending to Stay on Budget
Monitor your actual spending throughout the month and compare it to your budget plan. Make necessary adjustments to avoid overspending. If you need to cut back, start with your wants. Small savings can add up over time. Look at your fixed expenses, like rent or mortgage, for further cuts.
Step 7: Monitor and Review Your Budget
Review your budget at the end of each month and make necessary adjustments for the following months. As your financial situation changes, revise your budget to reflect new priorities and goals.
By following these steps and using the Khatapana app, you can record your income, track your expenses, as well as other money related transactions. Based on the insights available in Khatapana, you may also create a monthly budget that helps you manage your expenses, save for the future, and achieve your financial goals in Nepal.