budgeting is the process of determining how you will spend money against the income you got or you will get within a specific period of time.
Most often, money in our hands is volatile and it attracts soo many things. So many things of the world needs attention of our money and for most of people, their wants are insatiable. Most of the things we see in displays are things we would like to have, or rather are packaged and presented in such a way that they seduce us to wanting them. We have that inbuilt instincts in us to want to acquire things, and so when we have money, the excitements of spending it on buying things we want is real. Most of people gets joy on spending money for things that they want, shopping and buying of things is enjoyable and most of people are restricted in buying things by the fact that, monetary resources around them are limited.
Other sources of expenditure are involuntary but quite unavoidable. For instances, once in a while our friends and family members wants us to come through for them by giving them part of our income so as to cater for their emergence needs or those needs that are beyond their abilities.
If you are not careful, it is very much possible to find yourself spending all your income within a short time, and then find that you have no money to drive your life. We need money for our daily upkeeps. We need money to pay for transport or buy gas to travel to work and buy foods. We need money to cater for future expenses like school fees and shelter for our family. Money is the medium of exchange, which we use to get things we need for our survival. But not always do we spend money on what we need, sometimes we spend on things that makes us feel good and sometimes our emotions do not reason or agrees with reality. Our feelings of wanting to spend time in that expensive hotel and enjoy great moments or the feeling of wanting that shiny silvery expensive apple phone does not always reason that our sources of income are exhaustible and will finish up within a short period of time. The psychological feelings of excitement when buying things is mostly detached from the fact that our incomes are limited.
Due to the realities of life, and with realization that we cannot always get whatever we want because we will need to use our monetary resources with care, we need to develop a tool that can act as a guide, telling us what we need to buy and what we should forego at any particular moment. This is the work of budget.
In making a budget, we determine what is the total sum of our income within a given period. If we are salaried people, we know what is our salary. We separate our needs from wants. We write down the necessities that we need to survive hence helping our mind disengage with things that cannot help us to survive. Budgeting helps us avoid things that are attractive but not needed in our lives.
After determining the things i need, i determine the quantity is should have so as to last me before the next income. I get the price of each item i need, maybe by checking their costs from websites of the stores i buy from, or based on my previous expenditures on them. In the budget, i will start with the recurrent fixed expenditures like house rent, water bills, electric power bills, monthly subscriptions like internet connectivity and newspaper subscription. Then i set apart money needed for transport to work and then for other things like food items and then emergencies. Emergencies includes the money given to friends and relatives when they call for help. If they call and their is some money in an emergency kitty, they are lucky. If they call when emergency fund is exhausted, then they have to look for help elsewhere. That is how is used to do when i started working. I was was working on a tight budget and any mistake on financial matters could lead me to financial distress because i was earning too little in my teaching job.
However, nowadays i don’t do budgeting. I just pay my bills when they are due and buy things i need. I came to realize that, saving and living in a restricted financial life through tight budgets does not help financial growth. Strict financial budget and avoidance of spending can cause you have a limited life if not well managed. It creates stinginess and fear of spending on you mind, lest you go against your budget. This may cause you to forego a great investment opportunities because you fear spending money. Great opportunities to bring financial break through can come your way, but because you are too careful with your money, you stick with your savings instead of investing. Wealth comes through multiplying money by investing in the right places, budgeting helps you save on emergency but may make you stick to one source of income forever, creating scarcity in our mindset and hindering financial growth and freedom. There are people who spends more but keep on getting more yet some people are very stingy but will never have enough.
Don’t get me wrong, you cannot manage business enterprises without budgets and strict financial accounting, here am talking about budgeting your personal financial incomes from salaries and wages.
When you stick to budget, you may become unreliable to your friends because you may ignore their needs when they express them and failing to invest your resources on people that matters in your life limits your ability to create social capital, which may be more important that money itself. When you are too stingy with your money, you may loose connections that may create for you open doors for financial break through in future. I have ever bought something at random in the market and later sold it at some handsome amount later to somebody i met. Somethings you buy are assets and when you are too strict with money, you may not acquire assets because you only budget to consume.
On my own view, ability to discern the right things to spend money on is better than strict budgeting for those people that hates working on employment and living on salaries. The reason am saying this is because i once forego an opportunity to buy a property that was selling cheap some 10 years ago because of tight budgeting i was taught in school. I could be having a properties worth hundreds of thousands of dollars if i had made the right move. I usually regret my stinginess at that time.
We usually have personal budget because we are not able to determine the best way to use money. We are helpless before money. We lack discipline or knowledge on where to put our money, mostly due to lack of information or discernment. When we have money, most of us are prone to cone men that sells us fake opportunities. I can say that an average human being is stupid infront of money because money has a way of influencing our thoughts and emotions. Some people says money makes some people becomes stupid, and when it is gone, they become wise again. We usually have good plans for money until we get it and after we get money, we don’t remember our plans, it is a curse of man with money.