Bagging a large pay check is far easier than chalking out a budget that ensures your money, well majority of it at least, stays safely stacked away and doesn’t disappear without a trace.
With the cost of living in the UAE on the up-swing, and majority of the households’ shelling out huge chunks of their salaried income towards a cocktail of household expenses, loans, education and travel, it’s imperative that a home budget is put in place to plug any unnecessary cash outflow.
“Earlier I didn’t pay much heed to budgets. It was a ‘scary’ word, just like diet or size-zero,” quips Anika, adding, “I just lived from pay cheque to pay cheque and never gave it much thought, until I lost my job. That’s when I realised the importance of maintaining a back-up plan.”
Apart from functioning as a buffer during redundancies, it also doubles up during medical and other family emergencies. Excess money is never a bad thing.
Drafting a home budget isn’t difficult, as many would fear, and doesn’t require the help of financial experts. “Basic budgeting just requires about half-an-hour of your time, to sit down and draw out a table,” explains Rickson D'Souza, director of wealth management at Pinnacle, a UAE-based insurance broker and wealth management consultancy.
And, if there’s confusion over where to start, then there are a host of websites that offer formats to ease out the exercise. “There are so many online tools that help you plan simple, home finance. Even Microsoft Office Excel and Microsoft Money offer solutions. And most smartphones, tablets, iPhone and iPad come with apps that deal with budgets. It’s really simple.”
Once the basic homework is tackled, the in-flow and out-flow columns need to be filled. “You’ve got your income and your expenses, and then you’ve got to match it off,” adds D’Souza.
But, the exercise doesn’t end there. You need to review your budget, and alter it to ensure it constantly works for you. “Once your budget is in place, you need to review it. You have to check the budget versus the actuals… your income versus your spending. And within a month or two, you will know what your figures are.”
“The actuals,” D’Souza adds, “will indicate what is important and what you can cut-down. This will enable you to save more.”
Financial experts insist that home budgets need to be reviewed constantly, and altered to factor in changes. “Some months might be tight because your rent cheque is scheduled then, or your car is due for registration. So, you’ve to rework your numbers so that those cases are factored in,” explains a consultant.
The lack of flexibility, is often, reasoned for the failure of most home budgets. “I just couldn’t stick to the military regiment. I went back to my ways, two months after putting a budget in place,” confesses Rina, who, like most people, didn’t tweak their budgets to accommodate changes.
“Most people forget to factor in special events in their budget. Say, there’s a wedding in the family or a holiday, then you need to save up more on the months leading to the big event, so that you can splurge,” recommends an expert, adding, “Or better still, you can set aside a holiday/wedding amount every month so that you don’t feel the pinch later on.”
Some end up being complacent with their home budget, which is why most experts stress on the importance of rewarding oneself when a mini-goal has been achieved. “If you’ve been good and stuck to your budget, then treat yourself to a new pair of shoes or dress, or for men, a golfing trip,” insists a specialist.
Also, it’s important to set new goals. “Once, you’ve established the routine, then you need to up the game by setting new targets and rewarding yourself each time a milestone is reached.”
And, the key to any budget turning into a success is to keep your expectations real. “Don’t expect to turn into a money bag, the minute you’ve worked on your budget. It’s bound to take time, so be patient and plan wisely.”