25 August 2017

A Firstline Securities Limited Blog by: Maria K. Lewis


Quick question: is your name by chance, Oprah Winfrey…Bill Gates…or Prince Al-Waleed bin Talal Alsaud?

If your answer is ‘no’ to each of those names above, chances are you’re like the millions around the world whose lives are dependent on a monthly pay cheque, which is usually best guided by a (sensible) budget!

Now, several of you may be aware of the general reasons proffered as to why it’s so difficult to stick to a budget.  These can range from one’s inability to set a realistic budget, to one’s incapacity to keep proper track of one’s spend…to well…not even setting a budget to begin with.

In addition to these however, this blog offers three (3) additional – and possibly, very real reasons – as to why you’re scratching your head in frustration, as yet again, another month has arrived, and you still can’t understand where (and how) your money has gone!

1. You’ve fallen prey to (adult) peer pressure.

This point may resound most with the Millennials among us – but essentially everyone ought to take note in case this point does in fact relate to you.

Scenario: It’s the end of the month.  You’ve gotten paid.  Like any diligent guy or lady, you made your budget.  You then go out with your friends to celebrate…well the fact that you can once again afford to go out.  As you head to your meeting spot, you know (and tell yourself repeatedly) that you’re only going to spend X dollars.

However, that resolves starts to flounder the minute you meet up with your friends.  They’re drinking; they’re eating; they’re having a good time – and somehow the amount of money you’ve allocated for the night suddenly seems miniscule.  Your friends are all encouraging you to have one more drink; or to order another sushi platter; or to check out a new club with them!

You start to waver even more.  You feel yourself debating between the logical side (don’t you dare spend!) and the side which says ‘well all my friends are doing it’.  Sooner or later, you find yourself doing precisely what you hadn’t intended.   And at that precise moment you pull out your card and swipe, and those budgeted dollars in your account start to decrease…

Sounds familiar?  It’s possible that you’ve fallen prey to (adult) peer pressure.  You’ve allowed yourself to be swayed into doing something which you were previously adamant you wouldn’t.

What’s the fix? Firstly, it’s advised that you develop a better handle on your self-control.  As adults we have real responsibilities, such as mortgage and car payments, children to care for etc.  Most of us also don’t have parents any longer at our beck and call to bail us out whenever we are financially reckless.

If you believe however, that saying ‘no’ and having that inner strength is too difficult, then design a better budget which can sufficiently cover your ‘party spend.’  It may be wise though, to walk with just that allocated amount (and perhaps a little extra in case of any emergencies).  Be wary also of the silent tempters, such as your credit cards, which may create further unnecessary and unwanted financial dents if you’re not careful!  It may be prudent to leave those cards at home if you’re someone who’s easily susceptible.


2. You’ve forgotten about those Rainy Days!

Any good planner would always stress the importance of catering for contingencies…because life is full of the unexpected…right?

This point is fairly straightforward, but it’s one we tend to overlook.  After we’ve done up our neat spreadsheet filled with the items we have to, need to, must pay for, it is very possible that the ‘rainy day’ contingency funds may not make the cut.

One can argue that this is where your savings come in.  While that is true, it is also handy to ‘save your savings’, and estimate a percentage of your monthly income to any surprises which may arise.  This is particularly important if your savings are stored in a place where it may take a while for you to physically access.

Although we don’t wish it, accidents (no matter how small) do occur; or your tyres (which you checked two months ago) suddenly go flat; or…you’re running late, take a chance, hurry through the red light…and the Police catch you and promptly hand you a ticket.

It happens…

The fix, as stated above, is to consciously factor in a sensible amount for any unforeseen events which may arise…and they do!


3. Beware the ‘Hidden’ Costs

Oftentimes when we budget for the big things: such as the kids, the food, the house, the utility bills, the car etc., we neglect to factor in those ‘smaller’ items that we spend money on each month, which little by little, add up.

These can range from your monthly hairdresser/barber visits; to supplying your child with money for fundraisers/donations (which somehow always crop up at schools); to those days when you forgot (or were too busy) to pack lunch for work.  These small costs add up.

The key is to pay close attention to your overall spend each month – on those major costs yes, but particularly on the smaller, seemingly insignificant ones.

Starting from the next month, try to be meticulous enough to note all the places where your money is spent (especially if these are recurring costs) and itemise them in your budget spreadsheet.  From there, you will be able to have a better idea of where your monthly money goes, and who knows, even allow yourself to see where you can save and do better financially for the months to come!


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