Keeping your expenditure in check
Financial analysts say many people spend money spontaneously, thereby leaving their finances in a shambles. SIMON EjEMBI writes on steps you can take to ensure you don’t spend too much.
In Nigeria today, one major
economic challenge is the disparity between recurrent expenditure and
capital expenditure. While economists say the ideal thing is for the
government to spend more on capital projects, and less on recurrent
expenditure, the reality is that over 70 per cent of the country’s
expenditure is recurrent.
Financial analysts say the reality for
many people is similar. While they have been told that they ideal thing
is for them to plan, have budgets and saving – among other things, the
reality is that they spend spontaneously, with a large chunk of their
earnings going to “waste” on things they could do without.
Are you different? What do you spend
your money on? Is your expenditure budget-based? These are some of the
questions you have to consider in planning and managing your finances.
It is not enough for you to say “I didn’t waste the money; I spent it on
useful things”. This is because financial experts insist that as long
as you don’t have budgets, you certainly will make some mistakes.
To avoid “eating” or “wasting” your future and to keep your expenditure in check, consider the following.
What do you spend money on?
The first thing you need to do once you
decide to monitor your expenditure or to reduce how much you spend is to
know what you spend your money on. Once you determine this, you will be
able to review your spending and determine what you can take off the
list. If you can’t really tell where they money went, it is a clear sign
that you really need to cut down spending because you are spending more
than you ought to. The idea is that if you really spend money on things
you really needed, you will not find it that hard to at least remember
most of your expenditure. Try compiling a list of your expenses for the
last two weeks. How much went to beverages, snack, gum, DVDs, etc? How
much did you save? Are there items you bought that you did not need?
Stop unnecessary expenses
Having determined what you spend money
on and the things you don’t need yet they claim a huge chunk of your
earnings, the next step is to stop irrelevant spending. If you reside in
cities like Lagos, Port Harcourt or Kano, ask yourself if you really
need that beverage or snack being ‘shoved’ in your face while you are
stuck in traffic. Yes, you love sandals, but do you need another pair?
Some of these expenses might seem small but cumulatively they are huge.
Say you get a particular brand of beverage you really do not need at
N1.50 twice a day – on your way to work and on your way back home. That
is N300 per day. If you do that from Monday to Friday, it will cost you
N1, 500 per week, making N6, 000. You can imagine what that amounts to
in a year. That could be the money you need to gradually set up your
personal gymnasium, which in turn will help you stay healthy and fit,
thereby saving you thousands in health bills. It could also be money
that can be saved. The possibilities are numerous.
Stick to budgets
Without budgets, financial experts say
it is impossible to eliminate spontaneous spending. Therefore, in your
quest to cut out unnecessary expenses and to plan your finances better,
budgets are a must. It is not enough to just set aside, say, N20, 000
for foodstuff or to budget N100, 000 for your trip home for a festival.
When you want to go get the foodstuff, make a list of what exactly you
will get. That way, you won’t see one huge water melon that “is so cheap
and irresistible” even though it did not make your shopping list. The
same goes for the trip home; you need a break down of what the N100, 000
is really for.
Avoid ‘too much’ entertainment
The amount of money people spend on
entertainment and food has resulted in phrases such as “eating your
future”. With the economic situation in the country, experts say no
matter how much people ‘love to celebrate’, they need to ensure that
their love for financial planning and savings is also great. In a
country where virtually everything “calls for celebration” many people
end up spending a lot on entertainment and food; naming ceremonies,
“washing” a new car or promotion, birthdays, awards, movies, festivals,
etc. – the list is endless. According to experts people need to be smart
about these things; avoid what can be avoided. The main thing to
consider at all times is your earnings and your plan for the future. The
truth is that while some people can afford to have 30 cartons wines
that go for up N30,000 per bottle for a naming ceremony, many others
can’t and admitting that truth will help them keep their expenditure in
check and secure their future.
Review your utility bills
How much do you spend every month on
utilities? This is one area that experts say you need to pay close
attention to. In many states in the country such utilities bills as
water bills do not exist, but that leaves you with electricity and phone
bills; for some people, gas, etc. Do you really pay attention to these
bills? Before now many people had little control over what they pay for
electricity but now, in the era of pre-paid meters, you can and you
should. What do you do when suddenly you electricity bill reads N18,000
instead of the N5,000 range you have become used to? Do you make a
complaint or do you just pay? Consider applying for a pre-paid meter and
turning of electronic devices once they are not in use. You can also
save energy, which will reduce the level of electricity you use, by
replacing traditional bulbs with energy-saving light bulbs. While many
people do not think it is possible to pre determine how much they will
spend on recharge cards for their phones, nothing stops you from not
only doing this or making a habit out of it.
Get insurance cover
The rate of accidents, fire outbreaks,
robbery, etc. in the county is rather high. What this means is that
every day people lose one important item or the other. When this
happens, more often than not, they are forced to get a replacement
because of the importance of what they lost. Many people will find it
hard to leave their homes without a television set, for instance. So
when theirs is stolen, they are bound to get a new one as quickly as
possible. Phones are even more important in today’s world. To avoid
spending a fortune replacing items you have already purchased, insurance
is the way to go.
There are many steps you can take to
keep your expenditure in check, but the most important steps include
always considering what you earn, planning, budgeting and sticking to
your budget.
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