Shopping habits are changing, with people embracing the YOLO lifestyle and spending more than they earn. And with social media in the mix, the decisions are easily influenced. 71% of social media users are influenced to buy something after seeing it on social media. Everywhere you turn, there is something to buy. But if not planned well, shopping can take a toll on your financial health. In this blog, we will talk about how to create a shopping budget and stick to it.

1. Calculate your income

To know how much you can comfortably spend, you need to have an idea about how much money is coming in. Assess your income - your take-home pay. It is the money that is deposited into your bank account after every pay period. If you are a freelancer or gig worker, then track how much money is coming in every week/month. So, you have a rough idea about how much money will be hitting your account next.

2. Track and sort your spending

Now you need to track your spending. You need to know where your money is going, so you can identify problems and fix them. Here is how you can track your spending.

● Download your bank statements/credit card bills/UPI transactions over the last month.

● Then make a record of all your spending.

● You can use budgeting apps like Moneyview, Monefy, and Goodbuget to track your spending.

● This will give you an insight into your expenses so you can categorize them.

You can know how much you spend on essentials: rent, electricity, food, and how much you spend on wants like clothes, streaming services, entertainment, etc. Keep track of how much you spend on each category every month. Then analyze your spending habits, whether you are spending too much on eating out, or you are spending more than you actually earn.

TIP: Most of our transactions are done on UPI apps like GPay and Phonepe. You can use these apps to track your monthly spending as well, and see where your money is going.

3. Create a shopping budget

You know how much you earn, you know how much you usually spend. So, now it's time to create a budget. With your income in the back of your mind, create a shopping budget. You can create a monthly budget that includes both the essentials and the non-essentials.

1. Jot down your essential expenses: rent, commute, food & groceries, WiFi, water, and electricity bills. These come under the “needs” category. You need them to live.

2. Calculate how much you spend on needs. Ideally, it shouldn’t be more than 50% of what you earn.

3. Then create a list of your wants: clothes, skincare, gym membership, entertainment, travel, and more. Allot a certain limit to your wants and make sure you don’t overspend in this category.

4. Set aside a certain % of your income for your savings. You can decide where to invest it: mutual funds, real estate, jewelry, etc. Whatever suits your taste and is highly profitable.

Once you have a clear idea of how much you can spend on your needs and wants, you can create a shopping list. Make two columns: one for needs and one for wants. Make sure you stick to the budget.

TIP: If you want something badly and you seem to fall a little short on the budget, then you can always turn to couponing. Try to find deals on the items you want, so you can get what you want for cheap. Websites like GrabOn share active coupons codes from various brands that you can use to shop more and save more.

4. Analyze your shopping budget

Just creating a shopping budget will take you nowhere; you need to stick to the budget. At the end of the month, you need to reflect on your budget and analyze your spending. Ask yourself these questions.

● Did I overspend in any categories?

● Did I stick to the budget?

● Did I buy things I don’t need?

● Did I have enough for the month?

● Did I lack in any way?

Self-reflection helps you learn if you spent your money carefully. Hold yourself accountable for your purchases. Keep going back to your shopping budget and keep making changes to it according to your needs. Once you make budgeting a habit, you will start enjoying its benefits.

Tips to stick to your shopping budget

Planning is one thing, and executing is another. Sometimes, it can be difficult to stick to your budget. So, here are a few tips to make things easier for you.

Pick a budgeting method

Pick a budgeting method that suits your income and needs. You can try the 50/30/20 method (50% for needs, 30% for wants, and 20% for savings). Or you can use the Pay Yourself First budget (pay all the necessities, set aside your savings, and then use what’s left for your wants). Choose a budgeting method that is sustainable for you.

Make a shopping list

Try to buy in bulk by creating a shopping list. Whether you are grocery shopping or ordering skincare online, create a list. You can jot down all the things you need or want to order. Once you are shopping, just stick to the list and avoid buying stuff that’s not on your list. Avoid impulse buying because while this may give you instant gratification, it may create a dent in your pocket. So, stick to the list.

Don’t wait for month-end, track your spending daily

You may spend a huge chunk of money at the beginning of the month, when you receive your paycheck. But the expenses don’t stop there. You will be spending on commute, food, or other things throughout the month. So, track how much you’re spending daily, so you don’t go overboard. This also helps you know how much budget you have left.

Have a no-spend week every month

If you find it hard to stick to a budget and track your spending daily, then you can have one week of no-spend to increase your savings. This week, you can only spend on food and essentials. You don’t shop or go out, or spend money on your wants. Try to cook in and save money, do free things: like read a book or exercise, rather than going out and spending money. One week of no spending every month can help you save more and stick to your budget.

Wrapping Up

Creating a shopping budget is useful. It helps you keep track of your spending. You can actually identify categories where you are spending too much, and put a leash on that. Once you make budgeting a habit, you will start enjoying it. This will also help you reach your financial goals faster and make you more disciplined. So, the next time you want to go shopping, make sure to create a budget and include that expense in your monthly budget. Happy savings!