BUDGETING
Where does my salary go every month?
Shruti earns ₹65,000 a month in Pune and had no idea where most of it went. The exercise that fixed it took one evening.
THE SHORT ANSWER
Most of a salary disappears into small, repeated, forgettable spending rather than large purchases. The fastest way to find out is to download three months of bank and card statements and sort every line into four buckets: fixed costs, variable costs, debt repayments and savings. Almost nobody guesses their variable spending correctly.
The gap between what you think and what happened
Shruti is 28, works as a software developer in Pune, and earns ₹65,000 a month. Until recently she had no real idea where most of it went. She had ₹40,000 sitting in a savings account and a vague sense that she should be doing better.
She was not reckless. That is the part people miss. The money was not going on anything extravagant. It was going on a great many small things, each of which felt reasonable at the time and none of which she remembered a week later.
The three-month statement exercise
Download your bank statement and every credit card statement for the last three months. Three, not one, because one month is always an unusual month. Put every line into one of four columns.
- Fixed: rent, EMIs, insurance premiums, school fees, subscriptions. Things that arrive whether or not you think about them.
- Variable: groceries, transport, eating out, shopping, everything else.
- Debt: credit card payments beyond the minimum, personal loan repayments.
- Savings and investment: anything that left the account and is still yours.
Total each column and divide by three. That is your real monthly picture, as opposed to the one in your head.
What usually turns up
Three things, almost every time. Subscriptions nobody remembers signing up for, usually two or three of them. Food delivery that adds to more than the rent on a bad month. And a number in the savings column that is smaller than expected, because what was left over at the end of the month was treated as savings, and there was rarely much left over.
The fix is the order, not the discipline
Saving what remains at month end almost never works, because spending expands to fill whatever is available. Moving money out on the day the salary lands does work, because the rest of the month then runs on what is left.
Start with an amount that is comfortably survivable rather than ambitious. An automated ₹5,000 that runs for twelve months beats an aspirational ₹20,000 that gets cancelled in month three.
ONE MOVE THIS WEEK
Download three months of statements and sort them into the four columns. One evening, and you never have to guess again.
