While it is difficult to know what’s ahead, steps to good financial planning will minimise advert effect on your finances.
These are very difficult and uncertain time ahead for everyone due to the pandemic. Most people have already lost their jobs, or means of living and many more in employment are not certain whether they will keep it. Worst still is not being sure how long this will continue.
The predicted second wave of the pandemic is now happening throughout Europe, and most countries are in partial lockdown. Businesses are closed, and the hospitality industry is the worst hit of all. Honestly, I am not the one to comment much on Politics (I have limited interest in Politics), but I believe Boris Johnson and his team are trying with all the relief packages available to UK, citizens.
As long as we are not stargazer who can predict what the future holds, we can help ourselves by planning ahead to minimise the impact on our finances. These are the principal ones to consider.
Draw Out A Budget
A budget can mean different things to different people, but what is key in a budget is to analyse our priorities in spending our money, in a time like this when our income is in jeopardy. The key reason for a budget is to ensure we do not spend more than we earn. We have to deal with our bills and differentiate our wants from our needs. For those of us who do not know the difference, here it is:
Want — something nice to have, yet I could do without.
Need — something I must have to live and thrive.
We must realise that wants and needs can sometimes overlap, and it is here that we need to be realistic.
Everyone wants a big house for instance, with a swimming pool, and a large patio and garden. But do we need that additional expenses at this time of uncertainty of our income? Examine where you are at the moment, can you still continue to live there without much ado? Only you and your family can realistically examine this to come to the conclusion that it is right for the family.
‘’A budget is telling your money where to go, instead of wondering where it went.’’ John Maxwell
And to further prove that wants and needs can overlap is eating out and having a family vacation. Yes, we cherish our weekly eat out as a little family pleasure, but do we need to go to a five star Michelin restaurant now? What about meeting in a middle way, and go to a three-star family buffet? Our vacations too can be scaled down, perhaps not now, as most are not vacating because of the pandemic, but we can always scale down our expenses to accommodate future emergencies.
What About Your Expenses
Expenses that are essential must be paid for. Top on this is our gas, heat and light. Winter is coming, and it is not the time for the electricity company to trade insults with us for not fulfilling our obligations. I don’t know about other countries, but here in the UK, essential bills can be paid by direct debits. This is where you instruct your bank to pay these bills for you on a certain date of the month. In appreciation, some utility companies give you a discount on your bills, so you save a little bit of money there.
‘’Beware of little expenses. A small leak will sink a great ship.’’ Benjamin Franklin
Expenses are what you should be very careful about, and try to minimise if you cannot eliminate entirely. Most of the things we spend money on are not really essential like cosmetics, tobacco, alcohol, bottled water, and clothing items (we have large numbers) at home that are not used.
Paying your bills on time, and managing your expenses will definitely give you a good credit score. Having a good credit score simply means you can access cheaper borrowing, should you need it.
Get The Whole Family Involved
I am sorry to say this, most men believe they are better managers than their respective wives and children. Get each member of the family involved in your money management, so their demand is curbed, not because they do not want that item, but because they understand that we have to save a little.
For instance, tell your kids, if we can save up a little by eating out every other week, we can all to Disney next summer. You will notice how every one of them will be reminding you that they are eating at home this week. Explain why mum and dad need extra savings, they will happily go along with you.
Teach them also about savings and planning for their own little expenses. For instance, teaching them to save from their weekly pocket money is one good habit to impact on them. Anyone with the biggest savings at the end of say, a month, or every quarter, or six-monthly will get a special gift from dad and mum. By this habit, your children will start the act of money management early.
Get your children piggy banks, and if they are a bit older to manage a bank account, encourage them to open one, and pay in their pocket money (or allowances) there on a regular basis. This will serve as a sort of salary for them when they start to earn.
Let The Family Uphold Money-Saving Value
I have one money-saving value, that each member of my family is aware of, and this was passed down to me by my grandmother, who brought me up. It is: ‘’Waste not, want not.’’ I personally detest waste of any kind and get mad about serving yourself from a table, and you end up not finishing it, and chucking it into the bin. I don’t dish out foods to members of my family. I put foods on the table, and they serve themselves. And I make them understand you can always go back to have more if you particularly enjoy it. This is better than taking a lot, and you end up not able to finish it.
‘’I don’t want to be an apologist for poverty, but I can’t stand waste, useless spending, wasted energy, and having to live squandering stuff.’’ Jose Mujica
This is part of a greedy nature as well, which should be discouraged. I am happy some restaurants that serve buffet have now started charging customers extra in the UK, (£5 in the UK) if you have a leftover on your plate. This is communicated to you at the beginning before you serve yourself. And they always have a plaque that says, ‘’EAT AS MUCH AS YOU WANT, BUT DON’T WASTE FOOD, IF YOU HAVE A LEFT-OVER ON YOUR PLATE, WE WILL ADD EXTRA £5.00 TO YOUR BILL,’’ No food should be wasted, as there are some hungry people who will just be grateful for what you are throwing away.
Also, clothing items can always be passed down, or at best given to a charity. There are some charities that deal with pre-loved items, sell them, and unsold stocks are sent to developing countries as donations. Some of the unsold stocks are also given to some to start up a trade. I know that pre-loved items retail trade is a big business in Nigeria, and it is still thriving up until today.
Gifting what you no longer need, is also a blessing to others. It prevents ending up in the landfill, apart from making others happy. It is a way of teaching generosity too, to members of the family.