CONTROLLING SPENDING

The first step to controlling your spending is getting your financial house in order so that you can determine how much you spend every month.

In a society of constant spending and entertainment, forgetting to intelligently spend your money is common. Credit card debt and bankruptcy have affected many individuals, but you can prevent this from happening to you.

In Nigeria today, one major economic challenge is the disparity between recurrent expenditure and capital expenditure. While economists say the ideal thing is for the government to spend more on capital projects, and less on recurrent expenditure, the reality is that over 70 per cent of the country’s expenditure is recurrent.

Financial analysts say the reality for many people is similar. While they have been told that the ideal thing is for them to plan, have budgets and saving – among other things, the reality is that they spend spontaneously, with a large chunk of their earnings going to “waste” on things they could do without.

Are you different? What do you spend your money on? Is your expenditure budget-based? These are some of the questions you have to consider in planning and managing your finances. It is not enough for you to say “I didn’t waste the money; I spent it on useful things.” This is because financial experts insist that as long as you don’t have a budget, you certainly will make some mistakes.

To avoid “eating” or “wasting” your future and to keep your expenditure in check, consider the following:

What do you spend money on?

The first thing you need to do once you decide to monitor your expenditure or to reduce how much you spend is to know what you spend your money on. Once you determine this, you will be able to review your spending and determine what you can take off the list. If you can’t really tell where the money goes, it is a clear sign that you really need to cut down spending because you are spending more than you ought to. The idea is that if you really spend money on things you really need, you will not find it that hard to at least remember most of your expenditures. Try compiling a list of your expenses for the last two weeks. How much went to beverages, snacks, gum, DVDs, etc? How much did you save? Are there items you bought that you did not need?

Stop unnecessary expenses

Having determined what you spend money on and the things you don’t need yet they claim a huge chunk of your earnings, the next step is to stop irrelevant spending. If you reside in cities like Lagos, Port Harcourt or Kano, ask yourself if you really need that beverage or snack being ‘shoved’ in your face while you are stuck in traffic. Yes, you love sandals, but do you need another pair? Some of these expenses might seem small but cumulatively they are huge. Let’s say you got a pair of shoes you didn’t really need for N5,000, the following week, u picked up another pair of jeans not needed for N2,000, That is N7,000 in two weeks. If you do that for one month, you imagine what that amounts to in a year. That could be the money you need to gradually set up your personal gymnasium, which in turn will help you to stay healthy and fit, thereby saving you thousands in health bills. It could also be the money that can be saved. The possibilities are numerous.

Stick to budgets

Without budgets, financial experts say it is impossible to eliminate spontaneous spending. Therefore, in your quest to cut out unnecessary expenses and to plan your finances better, budgets are a must. It is not enough to just set aside, say, N20,000 for foodstuff or to budget N100,000 for your trip home for a festival. When you want to go and get the foodstuff, make a list of what exactly you will get. That way, you won’t see one huge water melon that “is so cheap and irresistible” even though it did not make your shopping list. The same goes for the trip home; you need a breakdown of what the N100,000 is really for.

Avoid ‘too much’ entertainment

The amount of money people spend on entertainment and food has resulted in phrases such as “eating your future.” With the economic situation in the country, experts say no matter how much people ‘love to celebrate,’ they need to ensure that their love for financial planning and savings is also great. In a country where virtually everything “calls for celebration,” many people end up spending a lot on entertainment and food; naming ceremonies, “washing” a new car or promotion, birthdays, awards, movies, festivals, etc. – the list is endless. According to experts, people need to be smart about these things; avoid what can be avoided. The main thing to consider at all times is your earnings and your plan for the future. The truth is that while some people can afford to have 30 cartons of wine that go for up N30,000 per bottle for a naming ceremony, many others can’t and admitting that truth will help them to keep their expenditure in check and secure their future.

Review your utility bills

How much do you spend every month on utilities? This is one area that experts say you need to pay close attention to. In many states in the country, such utility bills as water bills do not exist, but that leaves you with electricity and phone bills; for some people, gas, etc. Do you really pay attention to these bills? Before now, many people had little control over what they pay for electricity but now, in the era of pre-paid meters, you can and you should. What do you do when suddenly your electricity bill reads N18,000 instead of the N5,000 range you have become used to? Do you make a complaint or do you just pay? Consider applying for a pre-paid meter and turning off electronic devices once they are not in use. You can also save energy, which will reduce the level of electricity you use, by replacing traditional bulbs with energy-saving bulbs. While many people do not think it is possible to predetermine how much they will spend on recharge cards for their phones, nothing stops you from not only doing this or making a habit out of it.

Get insurance cover

The rate of accidents, fire outbreaks, robbery, etc. in the county is rather high. What this means is that every day, people lose one important item or the other. When this happens, more often than not, they are forced to get a replacement because of the importance of what they lost. Many people will find it hard to leave their homes without a television set, for instance. So, when theirs is stolen, they are bound to get a new one as quickly as possible. Phones are even more important in today’s world. To avoid spending a fortune replacing items you have already purchased, insurance is the way to go.

There are many steps you can take to keep your expenditure in check, but the most important steps include always considering what you earn, planning, budgeting and sticking to your budget.