VIRTUES THAT MAKES FOR SUCCESS

“ORDER” – Josiah Diaso

Ordering your resources (Budgeting)

With the recent plunge of Nigeria’s economy and indeed many economies in the world, individuals, families and organizations are faced with the prospect of limited resource to cope with the unending needs that constantly beseech. Now more than ever, the need to invest thought into the way resources are used becomes more apparent. Households in Nigeria have already began to feel the strain as prices of commodities have increased and incomes have either reduced or for many have stopped coming regularly. Resource Management is now no longer a term relevant only for firms and organizations, but has now become the new reality that families must come to terms with if they must stay afloat in this tough economic times.

It must be noted that this write-up will tilt heavily towards personal and family finance management.

Resources by their very nature are always scarce in view of the conflicting and often unending need for them, and it has become more apparent now than ever that resources must be allocated appropriately for efficiency. It is the very fact of scarcity that we need to prioritize and allocate resources; if resources are unlimited the discussion of resource management would actually be an exercise in futility, rather unfortunately, it is the needs of humans and human systems that are unlimited, what economists call insatiable.

Implicit in the discussion so far, is the fact that resources must be budgeted for if they must adequately meet the onslaught of demand for them.

Budgeting is actually a success principle (virtue) that must be mastered by anyone who has set goals to be attained through the use of available resources. Importantly, budgeting streamlines spending along areas of priority need. One thing that budgeting does that makes it a must if success must be attained is that it focuses your resources on the important stuff first. Budgeting is core planning, it’s an exercise vested in the conscious direction of thought to how resources must be allocated; a productive exercise that is worth every minute spent in it.

What do I budget for?

The simplest answer to that question is… Everything. Thought should be put into every money spent. Cliché as this may sound, it is the key to proper money management. The pitfall too many individuals and indeed families and sometimes organizations fall into is impulsive buying. It has been argued by some that it is rather impossible to at some point not be spontaneous in making buying decisions and hence one cannot be too precise in planning for the use of resources. Tenable as this may sound, it is rather a budgeting flaw not to accommodate possible spontaneous buying decisions in your budget. It could fall under your miscellaneous budget or it could be spread across your other budgetary provisions as excesses to actual budget needs for those items. What this means is that budgets should be made flexible to accommodate possible stretches in spending, and then again budgets should have some level of dynamism in it. For example when there are excesses in spending above budgeted sums on certain items in the budget, borrowing can be done into funds for other items, especially items of lower priority like entertainment. The caveat here however is that such withdrawals must be paid back into those items in subsequent budgeting periods.

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 will also keep you out of debt or help you work your way out of debt if you are currently in debt.

Beyond budgeting

True, the aim of budgeting is to streamline the use of resources, however financial experts are proffering that individuals and families should take their financial resources beyond budgeting in view of the current economic challenges currently faced. The following serves as recommended actions that could be applied to help cope;

Buy only items that are considered as necessities. Postpone all luxurious articles until later dates.
Re-evaluate your recurrent expenditure pattern like children school fees and effect necessary changes if found beyond your current income line.
If you have multiple cars, use those with less fuel consumption capacity. You may have to combine outings instead of the family taking different cars out for combinable outings.
Avert social functions that will tell terribly on your finances in terms of distance and the content of the programme.
Plan only on funds at hand. Avoid permutations based on promise made by others. In a time like this, the promisor may fail.
Where it is possible, talk things over on phone with people rather than putting your car on the road for physical meeting.
Shut all lights that are not required in your house to minimize the energy bills.
Do more physical exercise to minimize constant requirement for drugs. Learn to trek short distances, it helps to improve your health and relieve you of avoidable small expenses.
If the regular food in your house is becoming more expensive, look for cheaper alternatives. For instance, yam is a substitute for bread in the morning.
If you will bear heavy financial responsibilities in an event, insist on a moderate programme in line with the amount you could afford, you could save some finances.
Generator usage should be restricted to specific hours and to take care of necessities.
Reduce the amount of time you have to eat out at fancy restaurants.
Do bulk buying instead of retail buying, it is actually cheaper in the long run.
You just might want to hold out on the purchase of new clothes and shoes for a while until we are out of troubled waters.
Avoid unnecessary phone calls. It has been found that phone bills can be a drain pipe for people’s finance if not managed well.

The suggestions as given above are indeed very profound steps that can reduce expenditures and help save some much needed finance. Budgeting, important as it is, is largely inadequate when used alone as a financial management tool, especially for individuals and families. The right kind of discipline must be applied to ensure that families stay afloat.