As we approach the last quarter of the year, now is the best time to think about your financial goals for the year ahead. Regardless of whether you earn a fixed salary or are an entrepreneur, as long as you have a steady income, you can still set a target amount to save by the end of the year.
If you budget to save BND 10,000 by the end of next year, you would be expected to set aside BND 833 per month. Working backwards, you would need to save BND 30 per day to be BND 10,000 richer by the end of the year. We all know that it sounds too easy, but why are we not setting aside BND 10,000 every year?
Below are five key steps on budgeting to help you reach that financial goal you have in mind by the end of next year.
Be Realistic When Creating Your Budget
Understand how much things really cost in your daily expenses. There is no point setting a BND 300 budget on food for a family of six for the entire month, where your monthly average has always been BND 800. Of course, you wish you could do that but the reality is you can’t do that, without your children having to go hungry. It is very important that we adjust our expectations to reasonable ones. You have to be realistic about it.
Preempt the different seasons of the year in advance to understand when you need to spend more money. There is no perfect, generic budget template that works for each household. On a particular month, there may be three family members whose birthdays fall in the same month, you know that expenses will be high during the month with money spend on celebrations and gifts. And then, there’s a season when you need to buy school clothes or Raya presents, you’ll be better prepared to handle those expenses by planning ahead.
Everyone has a spending history that includes mistakes. Do not be afraid to have an honest discussion about it. Lay it all out on the table with your spouse, or the entire family for that matter, before you begin your budget. Once you start the conversation it will take you to a lot of wonderful places.
Get Back to Basics
Knowing your priorities can help put your spending into perspective. The very first thing you buy is food, the next thing is on shelter and then transportation. Then basic clothing, nothing fancy. Those are the basics to keep life going. Keep in mind that a fancy car finance, the latest hand phone and that BND 7 cup of coffee at the latest franchise chain are not considered as ‘basic necessities’. So if you are really serious about your budgeting, just remember to get back to the basics.
Be Committed, Together
A budget will work only if everyone involved feels like they had a say in the matter. No budget will work unless you’ve got all parties voluntarily, as mature adults, to agree to the plan. By getting everyone’s input every month, each will feel more committed to the plan and will work hard to stick with it.
Hjh. Nurul is the Deputy Head of Consumer Banking and the Head of CSR in BIBD. She has worked with BIBD for over 18 years in the areas of Finance and Investment banking. Her current portfolio includes managing the Sales & Distribution Channels of Consumer and Retail Banking. Hjh Nurul holds a BA in Accounting & Finance from the UK and was an IBB scholar.