It is January again and it seems the majority of citizens are in a financial crisis and many are flocking to loan shark outlets for quick bailouts.
I want to emphasise the importance of budgeting and what a budget is and its importance. Starting off with budgeting, which is a process of creating a plan of spending your money and this plan is called or known as a budget, so in a business sense it is the planned allocation of available funds to each department within a company.
Budgeting allows executives to control overspending in less productive areas and put more company assets into areas that generate significant income or good public relations.
In a personal financing sense, budgeting can mean estimating monthly living expenses based on previous bills and wages. If your monthly income is a steady N$3000, for example, you can subtract all of your known monthly bills from that figure even before they arrive. Some bills can be estimated and subtracted from the original income figure
Why is budgeting so important?
Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.
January is the first month of the year and has become the most dreaded month for people when it comes to availability of cash. Is this just a myth surrounding the month of January or are most Namibians always really broke in January? Or there are actually people who learn to manage their finances well and live effortlessly well in January?
I say January is a normal month like any other month. As I always say November’s salary is for December and that of December is for January and during the festive season many people get their bonuses in this months but over-spending and excessive partying during the festive season gets people dry in January.
Lots of people tend to go overboard in a bid to satisfy their cravings in the festive period. Everyone gets into the mad rush of buying new dresses for themselves and their kids, some change homes, appliances, gadgets, phones etc.
There is a say that says money doesn’t grow on trees, which means it’s not easy to get money. We have to work hard to make money. We can’t just walk around and pick it like fruits from trees. When economic times are good, many people become lax about personal budgeting. As long as there is more money coming in than going out, all is well.
But there those who learn to establish a workable budget and keep within it during the lean times often survive major financial crises better than those who don’t. Financial discipline can spell the difference between weathering the storm and declaring bankruptcy. Avoid overspending during the holiday season may not be easy. It certainly requires extra time and effort. But trust me, your January will thank you for it.
I would like to encourage Namibians to live within their means other than going out to borrow, either through overdraft facilities and cash loans, as it is not healthy. Of course, it will be healthy if we can live within our means – if affordability is proven. However, as we are advocating in today’s world that the culture of saving, borrowing wise, spending wise should be the norm.
In addition, people need to build up reserves to cover up for any circumstances such drought, any emergencies, natural disasters, etc. Those reserves will be used as remedial action as our bailout solution for them other than to go to the extent of borrowing money and you will become highly geared and over committed.
For one month keep an exact spending diary, listing every penny you spend. Even if you don’t change your habits it’s eye-opening to see where the money goes. The easiest way to save money is to not spend it needlessly.