Rising fuel prices are not only impacting the nation's economy, but the household budgets as well, creating new set of challenges for everyone.
Fuel prices have increased sharply in India over the last few months on the back of rising global crude prices. However, what is more worrisome is the fact that the rising fuel prices are not only impacting the nation’s economy, but the household budgets as well, creating new set of challenges for everyone.
“When oil prices go up, the impact on the price of petrol and diesel are just the most visible and immediate repercussions. There are (however) larger implications for macros like inflation, interest rates, trade deficit, exchange rate of the rupee and the forex reserves. It is this strong downstream impact of oil that makes it a big challenge for the economy and also for the individual household budgets,” a research report by India Infoline recently said.
Although managing one’s household budget becomes a challenge, particularly in times like these, however, where there is a will, there is a way. Here’s how you can do this just by following some simple tips:
1. Track every expense
List all purchases and bills paid. Keep a very close track of all credit card, cash and debit card purchases. “By tracking each and every expense down to the penny, you will quickly understand where you are spending more money. This will force you to consider cheaper options,” says Anil Rego, Founder and CEO, Right Horizons.
2. Lower unnecessary expenses
Your utilities, home loan or rent payments and medical bills are necessary costs. However, snacks, evening coffee, movie tickets and eating out are not as necessary. Draw a line between the must-have and other expenses. When your budget is squeezed due to rising prices, you have to lower you unnecessary expenses one by one.
3. Raise income
If your income is considerably more than your expenses, you are prepared for any rising costs. But, for most of us, that is not so. Our income barely meets expenses or with rising prices does not meet costs. “If all your expenses are necessities and your income is still falling short, you have raise income by pursuing a vocation, doing some freelance work or some part-time jobs during the weekend,” says Rego.
4. Go for lifestyle changes
An income from a part-time job may make the difference in managing your budget. But in an economy that is not growing as fast as it should, part-time jobs that pay well will be hard to come by. Hence, implement lifestyle changes. These might include using less power for cheaper utility bills, driving your car fewer miles, buying cheaper products while grocery shopping etc.
5. Lower debt outflow
No more than a third of your in-hand income should be used to service debt. Be it in normal times or in times of rising prices, debt repayments take a fixed chunk of money away. “Hence, it is important to lower your debt outflow to a manageable level. Do not keep adding debt with rising in income. Try to save at least one-third of your net income. This will help you to tide over phases when your budget faces challenges,” says Rego.