I started tech budgeting and you should too
Before going to bed one night last month, I received a text message: “You have spent Rs 459 on debit card on Amazon.” I read the message and slept. Later in the morning when I woke up I read the message again and wondered why Rs 459 had been charged to my debit card. I then checked the Amazon app and realized that I forgot to turn off auto-renewal. Rs 459 is not a huge sum but it really pissed me off when the money was deducted from my account for a service I no longer use. That day, I realized that I needed to better understand my monthly expenses, especially the amount spent on services and apps. I’m not trying to be a personal finance expert, but I want to share my experience and some tips you can apply to better manage your tech budget.
Understand where your money is going
Whether you’re a student or a professional, start paying attention to the basic fundamentals of financial literacy. No one will tell you which is more important: a coffee at a cafe or paying your smartphone EMIs before the due date? The goal is to understand the benefits of financial literacy so you know where your money is going. Every penny counts. Until a few months ago, I was randomly buying vintage gadgets on OLX and because of that, I messed up my finances. I still buy vintage gadgets, but now I look at my bank balance and review my expenses before buying anything new.
Allocation of a monthly budget for streaming services
About a month ago I logged into my savings account and started calculating how much money I spent on subscriptions. To put it simply, it was a shock, especially the fact that there were so many monthly subscriptions that I had forgotten. It’s easy to sign up for subscription services, but hard to keep using them or keep tabs on what you’re spending on them.
First, let me tell you how many subscription services I have subscribed to:
Xbox Game Pass
Disney Hotstar Plus
Apple TV Plus
Here’s what I did to reduce my spending on streaming and subscription services.
Identify the services you can cancel
Sit down on the weekends and figure out which services to keep and which to cancel. For example, if you subscribed to Netflix and haven’t watched any shows you like recently, just cancel the subscription. It can save you Rs 499 per month. Instead, save money for another important financial goal, like traveling or paying EMI for the laptop you just bought. The good thing about these services is that you can rewind at any time and resume whenever a show is interesting enough.
Choose the basic subscription level
I know people whose only mode of entertainment is Netflix or Amazon Prime since they don’t have cable at home. I will tell them to choose the basic non-premium subscription level and save some money. Netflix, for example, costs Rs 149 for a mobile-only plan. Going with this package makes a lot of sense financially if your viewing is limited to mobile. Before subscribing to any service, ask yourself if you really need the super premium subscription plan. For example, Disney Hotstar Plus offers three tiers, and each plan costs more than the other. Its Rs 1,499 annual plan is useless if you don’t have a 4K TV at home, but four people can log in using the same account and enjoy ad-free content.
Look for a bundle plan
Instead of subscribing to individual services, opt for a package that bundles many services under one roof. I don’t know if you’ve heard of Apple One, it’s a service bundle that bundles Apple’s premium service offerings, like Apple Music and Apple Arcade, at a discount. I recently subscribed to the Apple One individual plan, where I got access to Apple Music, Apple TV Plus, Apple Arcade and 50GB of iCloud storage, all for Rs 195 per month. I used to pay for Apple Music and Apple Arcade individually, and both services cost over Rs 200 per month. Another reason to choose the Apple One bundle is Breakup on Apple TV Plus, a show I’m currently addicted to.
Hot Tip: Make sure you know which mobile data plans offer free access to popular streaming services. Reliance Jio, Airtel and Vi (formerly Vodafone) have prepaid and postpaid plans with a free subscription to streaming services.
Dedicate a monthly budget
This is probably the biggest lesson I’ve learned about money in the past decade. Not only does budgeting help you achieve your financial goals if you stick to it, but documenting all expenses incurred in a month is a smarter decision in the long run. Here’s how.
A package for streaming services: Commit a budget that you need to spend on streaming and subscription services. An easy way to divide it is to use the 50/20/30 budgeting rule. Essentially, you divide your income into three parts: 50% of your income goes to basic needs (rent, groceries, etc.), 20% goes to savings (and debt repayment), and 30% is for personal use (restaurants, streaming services, etc.). If it works, a monthly budget will give a lot of flexibility. In my case, I have determined which services I want to use and based on this, I dedicate a monthly budget. For me, the biggest challenge is getting into the habit of knowing how much to spend each month.
Track where your money is going: Write it down on paper, maintain a spreadsheet or use budgeting apps, and write down all the expenses you have for a month. The ability to make better financial decisions is what you need to learn, and that too quickly.
Classify your expenses by type: I might pay a little more on PlayStation Plus, but I don’t have to pay banks or credit card companies for a new iPhone 13 in monthly installments. I have the freedom to cancel the PlayStation Plus subscription any day, but you don’t have the option to skip the monthly installment and pay it later.
Leave room for flexibility in your budget: I have seen people who allocate a monthly budget with great enthusiasm but are unable to stick to a budget when their income is not stable. This is the harsh reality. Budgeting can be very difficult when your income is not stable or your expenses are constant. You know you are planning a trip to Dharamshala, so your tech budgeting should be done accordingly. Can I cut a premium Spotify subscription for three months and spend that money on renting a bike instead? Understand that your income or expenses vary on a monthly basis. You don’t have to reduce everything; It’s all about priorities in life.