Household Budgeting: Follow these two core principles to build a healthy financial habit in the family

economictimes.indiatimes.com:

household budgeting, the responses I get are rarely positive. ‘We overshot the budget by such a large amount that making it seemed like a cruel joke.’ ‘We cannot make budgets for family events as it does not work.’ ‘Budgets are boring; they impose rules where they aren’t needed.’ ‘It’s not always about money; sometimes the heart must make the decision.’ Many of us believe that we are living in prosperous times and setting limits for spending is old school and outdated. In today’s India, spending power defines the freedom of a household to break free from the shackles of erstwhile shortages.

It is a proud social symbol to signal that one can spend without a tinge of remorse or regret.

Among various markers of household personal financial position—earning, spending, saving and investing—spending gets the most attention, both for the spender and onlooker. We no longer discuss incomes openly. Saving is always secretive and somewhat guilt-ridden, and we only tell half the story with respect to our investments.

However, spending is our everyday message that comes across loud and clear to anyone who cares to notice. The personal financial discipline that enables lifelong habit of sensible allocation of money is lost when spending becomes the sole marker of our wealth and turns reckless.

There are two core ideas to imbibe about personal finance. First, money is a limited resource.

For everyone, except the top 1% who have more than they can realistically use, money is a limited resource. Second, there are alternative uses of money and one makes a choice every time one uses it. I never tire of repeating these two principles because household financial behaviour, habits and, thus, health, depends on how well-entrenched these