Many people all over the world are unable to save money either due to careless spending or an oversight of proper budgeting.
Budget planning puts one in control of household spending and analyses results to help take control of your money.
For instance, many have no idea where their salary goes to. They are sometimes forced to borrow to pay bills. If any of these statements applies to you, it’s time to write down a household budget.
Investigations revealed that quite a good number of people are put off by the word budget, because they associate it with restrictions on spending and frugal lifestyles. That’s a misconception. Budgeting does not make you spend less, but allows you to spend smart.
Speaking on benefits of budgets, a personal finance expert, Mr. Chidi Onwuka, said a good budget enables the planner to focus his money on the things that are most important to him by preventing him from overspending on less important items, a budget channels resources to areas that should be given priority.
Onwuka explained that in the post-demonetisation economy, tracking expenses is not very cumbersome, but the use of plastic and other cashless modes means that overspending can be a problem.
“This is where budgeting apps play a critical role. They help track your expenses and alert you if you exceed certain limits. Don’t underestimate the utility of this feature,” he said.
He noted that overspending on eating out and clothing is the most common reason why young people lose out on the golden years of compounding.
“If you save N10, 000 a month in an option that earns 10 per cent annually, your profits at the end of 30 years would be massive. But if you start five years late at 35, your profits will be smaller. The derailing of financial goals is not the only problem. Shopholism can ruin careers, wreck relationships and cause disharmony in married life”, he said..
Some budget analysts have found out that spending too much was the most common reason for money arguments among couples. The problem was very pronounced (52 per cent) among younger couples below 30, and gradually decreased (34.9 per cent) among older people
after 40.
“As we all know, the profusion of choices offered by e-retailers and the convenience of online payments have led to an over-shopping epidemic in some parts of the world. Most buyers, especially the younger set, don’t realise that every unnecessary purchase pushes back their long-term goals,” said Mr. Kayode Oyekanmi, budget planning practitioner.
He said that shopping is not a vice, but it can become a problem if the expenses prevent the individual from saving for critical financial goals, adding that budgeting can prevent such situations.
“It prioritises your expenses and allocates resources in a way that all your financial commitments are addressed,” he said.
Some tips on good budgeting;
Make sure that you are not spending more than you make. Balance your budget to accommodate everything you need to pay for. One easy way to do this is with easy-to-use budget calculator spreadsheet and
worksheet.
Put Your Plan into Action
Match your spending when you receive your income. Decide ahead of time what you’ll use each pay cheque for. Ask yourself: Have I allocated money for my necessities (housing, food, utilities, transportation)? Have I put money aside for my debt payments, unexpected expenses, savings and the fun stuff? This will protect you from going into debt further because you won’t rely on credit to pay for your living
expenses.
Look Ahead.
Getting on track with a budget can take a month or two. You’ve lived all this time without a spending plan, so give yourself time to adjust. Don’t be afraid to ask for help if things aren’t falling into place.
Experts’ advice
A finance counselor, Mr. Peter Adebayo, said that it is always prudent to decide how much you can spend when planning for shopping. To him, looking at your bank account and making a firm budget that you will be able to stick to before embarking on any spending or purchases is discerning.
“Most times, people get it all wrong, by just spending money, hoping that there will always be money and that they won’t spend as much as before, and before they realise it, they run into debt,” he
said.
