• Wednesday, July 24, 2024
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BusinessDay

Taking hard decisions on your finances

your-finances

The beginning of the year is the perfect time for financial resolutions.

Ask yourself important money questions, setting of goals and make a decision to change your financial habit into the better.

If your income will be affected for more than a month, adjust your spending habits to maintain control of family finances over an extended period. Most people try to hide their financial problems from themselves or family members. Not facing your problems can be very destructive because the worry and stress caused by financial uncertainty and lack of cash may be worse than the financial problem itself. It’s important to look realistically at your situation and actively seek solutions to your problems despite the discomfort.

Because spending decisions affect the whole family, talk with your family about the situation. Let them know the family needs to change its spending. Involve everyone in deciding spending priorities. If family members understand the tough choices that must be made and have a voice in making the decisions, they will be more willing to accept the decisions.

As your family talks about what is most important, be sure to listen to what they say. Supporting each other can help you pull together as a family and get through the tough times.

First thing to look at is spending for non-essentials such as luxuries, vacations, eating out, and home furnishings are eliminated or reduced

first. As the reduced income continues, many families also report reduced spending for basic needs including food, shelter, transportation and medical care.

Some even make a new spending plan that includes a revised plan for getting the bills paid. Fewer families increase their income or use more credit to manage finances. Borrowing or using credit to pay bills often brings only temporary relief. For those families who did increase their use of credit, the more they borrowed, the unhappier they were with their financial situation.

Families who quickly made changes in their spending habits were the most satisfied with how they were managing. Families who didn’t make changes felt more out of control and more dissatisfied.

Spending plan is always an effective tool to help you get the most for your money. It is even more important when you have a sudden change in your income. A spending plan helps you to make decisions about how to spend your money, provide for needs before wants, match your spending to your current income and prevent family arguments over money.

If you had a spending plan before your income was slashed, you probably

know how much you were spending for monthly expenses. Remember, not all of your expenses are monthly. House rent or land-use charge, insurance premiums and holiday gifts or family event gifts come only periodically.

It’s easy to forget about them and then not have the money to pay for them but you will also need to set aside some money in your monthly spending plan to meet these occasional costs.

Once you have a spending plan that sets spending amounts for essential

family needs and balances your spending with your income, you’ll have to stick to it. Writing it down is not the issue, using it is most important to guide your spending.

TIAMIYU ADIO ISMAIL