EASY BUDGETING – PART 1

There have been a lot of discussions in the media about “budgeting”. Many persons know the time of year is fast approaching when the Minister of Finance presents a “budget”. Then there will be a “budget” debate in parliament, followed by several discussions in the newspapers, radio stations and the T.V. stations about the “budget”, but not many persons realize that this time of year is also the appropriate time for making their own “budget”.

What is a “budget”?
A budget is a statement of financial priorities. It requires an assessment of your income, an assessment of the things you need to spend on, which are more important when you have to spend on these things and how much money can be saved. The language that is normally used in Gordon House is an assessment of revenue (income), expenditure (what will be spent) and reserves (savings). In both cases a budget is a statement or listing of the amount of money you earn, the amount of money you have to spend on the essentials and the amount of money you have to save. Savings have many purposes, creation of wealth, investments or to be used for other activities that are important but which may be seasonal, example – school fees for your children or exam fees for yourself.

Recurring Expenditure
There are certain expenses such as bills that from month to month or even week to week you will have to spend on. These are known classically as recurring expenditure. Or, put in simple language the “bread and butter” expenses – just the necessary or essential spending. These include, rent or mortgage, light, water and telephone bills and money for food or grocery and transportation. One advantage to doing a budget is knowing in advance the real amount you will have to pay on these items. As long as you are earning more money than the total of these expenses then there is the potential to save some money each week or each month. Even if this is so, you should always make the effort to lower these expenses. Spending less time on the phone, or turning off the lights and the T.V. when you are going to bed as well as conserving on your use of water are examples of how you can lower these expenses.

Watch your Consumption!
Apart from your rent or your mortgage the other essential spending are based on your consumption. If the amount of phone calls you make and the length of time spent on each call goes down, then your consumption goes down and the amount of money you spend in this area on phone cards or on your telephone bill goes down. If the amount of light you use go down, or the length of time you keep the T.V. on while you are not watching it goes down then your consumption goes down and the amount of money spent for light bills will also go down. The same is true for your grocery bill. If you spend less on expensive brands of food, and do not buy more grocery than you really need, and use the grocery you buy efficiently, then the amount you consume goes down and the amount of money you spend on grocery will go down.

It is Easy to do a Budget!
For the next few weeks the Consumer Affairs Commission will be using this space to help readers of THE STAR to create and manage their own budget. Next week we will present ten (10) tips to help you to create your own budget, and will show you that it is Easy to do a budget! As long as you are willing to take the time to sort or prioritise your spending, measure the amount of money you spend, with your actual or real income and with your real needs it will be possible for anyone earning an income to save. The surest way to do this however is to understand your consumption patterns and to learn that the less you consume is the less you will spend and the more you will be able to save.

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