TUNDE OYEDOYIN
Tunde Oyedoyin is a London-based personal finance coach and founder of Money Intelligence Coaching Academy, a specialist academy of personal finance. He can be reached as follows: +447846089587 (WhatsApponly); E-mail: tu5oyed@gmail.com
First things first. In an earlier piece in December, yours truly asked: “Have you started thinking of next year?” Keep that at the back of your mind as the dots will sooner or later connect. Let’s roll on.
You may have heard the saying that what you don’t know can’t hurt you. Well, there’s a high level of truism in that. However, if you never knew that budgeting matters in both public and personal finance, it may have hurt your pocket. But now you know.
Liz Truss, Britain’s shortest serving prime minister was forced to hand over the keys of Number 10 Downing Street as a result of the mini budget that her chancellor of the exchequer came up with.
Prior to having to call in the removal people to pack her family’s bag and baggage out of Downing Street less than six months after moving in, a dark cloud of economic crisis had descended on the country after that budget was presented to the House. The markets reacted negatively and it was soon game over for madam Truss and her chancellor, the Rt Honourable Kwasi Kwarteng. That moment in Britain’s history is a testament that your budget can make or break you. In other words, if you can’t evidence your intentions with your budget, it’s probably not going to fly.
Here’s the thing, budgeting is a powerful tool. Like guts, it can equally be used to drive your financial goals. Therefore, don’t forget to factor in this important tool if you hope to hit the home run with those financial goals you’ve listed for the year.
Just to set the tone right, what is budgeting? It’s nothing complicated. Simply put, it’s a plan of your proposed earnings and what you intend to spend over a particular period. For our purpose, it is what you plan to earn and spend this year. That being said, it shouldn’t be cast in stone. So, if you need to tweak it along the line, please go ahead and do the needful.
To give you a clear example of budgeting as a tool for oiling your financial goals, if, for instance, you plan to save up for next year’s rent this year, you can decide to start budgeting for that in February or in the second quarter. Perhaps you’re hoping to have your summer at a golf resort in Lekki, your budget should reflect how you’ll come up with the money.
So, whether you plan to save just one or three percent of your salary from February or March, budgeting for it will help you know exactly what you’ll be spending then. The same applies to your income, your budget will let you know whether it’s going to be up to par or not with your outgoings.
By budgeting, you learn to appropriate your earnings against your expenditures and cut the coat with the available cloth at your disposal. If you need to source for more materials, your budget should reflect it.
Your budget is actually like a roadmap and with it, you can plan for which of these financial goals can be achieved this quarter and which ones can’t. As an exercise, why don’t you start budgeting for this year’s Christmas from March?
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