A lot of people are not concerned about budgeting whether it be for personal or family and sometimes a corporate organisation.
This perhaps is the reason why Nigerians are seen as highest spenders compared to some other countries in the world.
Living without a budget is just like travelling across the country without a guide or roadmap, experts say. Budgeting acts like a roadmap such that when you create your budget it will reveal what your every naira is being spent on.
One of the keys to successful budgeting is to understand why you are budgeting and to give your budget a real purpose, says Miriam Caldwell, personal finance specialists.
To her, if you sit down before you begin your budget and make a list of the goals that you want to achieve and look at your financial picture you will be more successful at sticking to your budget. It also helps you shape your budget to match your financial goals. After you set up your budget you should analyse your budget to make sure it will help you reach those goals.
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There is need for you to know why you want to budget. It’s not enough to know that you should budget because it is the smart thing to do with your money. To be successful you need concrete reasons and new goals that you are working towards.
When people first begin budgeting they often have debt to pay off or they want to purchase their first home. Knowing why you are making the sacrifices in spending makes it easier to be successful. It also helps you to continue to have focus after time has passed.
Rating the importance of your budget goals is necessary in budgeting.
She said it may be best to focus on one goal at a time. For example you can get out of debt much more quickly if you apply all of your extra money to one debt at time, because you can roll your payments into larger ones, and save on interest. The same principle applies to the majority of your financial goals, although you should focus on your retirement at the same time as your other goals.
According to her, a time limit for your goal helps make the goal concrete. It also lets you divide the goal into specific measures and determine how much you need to put towards the goal each month to achieve it. This will help you when you begin budgeting, because you have a set amount that you need to find in your budget. Choosing an amount to find in your budget makes it easier to cut expenses and will help you work towards your goals more quickly.
HOPE MOSES-ASHIKE
