Tag Archives: expenses

The Basics of a Budget

June 29, 2007Budgetingemergency account, expenses, finance, JamaicaCHS

“I notice that you always stress the importance of budgeting in your columns, but I can never seem to get around to preparing my household budget. It seems like too much effort to work out all those figures. I really need to get my finances under control, but I’m wondering if there is an easier way to do so without going through the process of doing a budget?”

There’s a very simple and straightforward answer to your question: “No.” No matter what your financial concern is; whether it is getting out of debt, investing your money more efficiently, buying a home, or starting your own business, the very first step to getting to your goal is preparing your spending and earning plan – otherwise known as your budget.

Would a contractor start to build on a piece of land without first obtaining a surveyor’s report to understand what was needed to proceed? Would a doctor operate on a patient before she ran the necessary tests to see what the problem was?

In the same way, you have to be very clear about your current financial picture before you can make the desired improvements to your finances. Continue reading The Basics of a Budget →

Watch Your Cash Flow

March 23, 2007Budgetingcommission, expenses, finance, Jamaica, Rich DadCHS

“I work freelance and my income comes in at different times over the month. I’ve done my budget and it shows that my income is more than enough to meet all my expenses. I really try not to spend money carelessly. However, every month I’m always short of funds to meet my obligations, and I end up having to borrow from my family to tide me over. I don’t know what I’m doing wrong. Help!”

At a recent business seminar, I had the privilege of listening to a wealthy Texan businessman, Keith Cunningham reveal some of his secrets of success. Cunningham was one of the ‘rich dad’ mentors of Robert Kiyosaki, bestselling author of Rich Dad, Poor Dad. In his presentation he highlighted the importance of reading and understanding financial statements.

Cunningham pointed out that most people go straight to the profit figure on an income statement, to decide if a business is performing well, but neglect to focus on the cash flow statement. This ‘rich dad’ declared that while the profit and loss statement could be called a theory, cash flow was the reality.

“Profits do not sustain a business, for it can live for years without a profit,” he said, “but it will fail if there is no cash.”

Continue reading Watch Your Cash Flow →

Living Within Your Means

March 1, 2007Spendingbudget, expenses, finance, JamaicaCHS

“Last year I moved out of my parents’ house, and now I’m finding it hard to make ends meet. When I lived with them, all my income went into clothes and entertainment, because I had no bills to pay. Now I constantly have to borrow from my mother, and I have a credit card bill that I don’t know how I’m going to pay off. How can I live within my means?”

Living within your means can mean different things to different people. Some persons think they are doing okay financially if their salary can afford them the credit to buy whatever they desire, and they can meet their debt payments every month. Others are happy if their income can pay for all their necessities, but aren’t too worried if there’s not much left behind for savings.

In reality, living within your means is being able to establish an optimal balance between your income, expenditure and savings to ensure that you can meet your financial objectives without getting trapped in unnecessary debt. In other words ‘your means’ cannot just be about your current spending needs, it has to take into consideration being able to fund your goals for the future.

How can we manage our money to ensure that we can meet our current obligations and still save for the future? Continue reading Living Within Your Means →

2007 Money Resolutions

December 29, 2006Goalsexpenses, finance, financial advisor, investment account, JamaicaCHS

As 2006 winds down, let’s take some time to look back at all the experiences, both good and bad, that we’ve had with money this year, and reflect on the lessons that we’ve learnt. This is a perfect time to make some definite plans to make 2007 a really ‘Prosperous New Year’.

Here are some money resolutions that can help you to be financially successful in 2007 and beyond:

1. I will make a budget.

Get honest about the state of your finances by documenting all your expenses. Then write down your income to see if you’re really earning enough to cover your spending. Chances are, if you feel like you’re living ‘hand-to-mouth‘ or you’re in debt, then your income isn’t enough to meet your needs. The following two resolutions will help to solve this problem.

2. I will reduce spending on unnecessary items.

Look at your budget to see where you’re spending too much money. Phone cards, fast food and entertainment are some of the areas where money goes down the drain. Ask yourself if you would prefer to achieve a big financial goal or to continue to waste money on frivolous items. Make the choice to save more or reduce your debt, by spending your money more wisely. Continue reading 2007 Money Resolutions →

A Budget for all Seasons

October 20, 2006Budgetingexpenses, finance, JamaicaCHS

“I find it really difficult to make a proper budget. Each month I write down all my expected bills, but somehow I seem to spend more than I had planned. Some unexpected expense always appears and throws off my planning. Please help me to figure out how to do a budget that actually works! “

Budgeting can sometimes feel like an unrewarding exercise. It can be time-consuming to record all the planned expenses, as well as depressing to see how much money you’ll need to spend written in black and white. It’s even more frustrating when you do all that hard work and your budget doesn’t match what you actually end up spending!

Congrats on making the effort to organize your finances with a budget. Many people don’t bother to budget because of some of the reasons above. They are also reluctant to plan for their needs and goals, displaying a wishful attitude that things will all work out for the best eventually.

Whether you earn J$20,000 per month or take home J$200,000, making a plan for your expenses is absolutely essential to manage your money properly. Continue reading A Budget for all Seasons →

Save Now for Back to School

September 8, 2006Budgetingexpenses, finance, Jamaica, school feesCHS

“Sending my son back to school this month has been really hard. His father, who usually pays for school fees and books, recently lost his job and had nothing to contribute. I’ve had to borrow from friends to pay the fees, and most of the books have not been bought yet. How can I prevent this from happening again next year?”

School is in and many parents are still reeling from the effects of back-to-school expenses. Some may feel that September comes around too quickly, as they are never quite financially ready to meet the major expenses that this month brings.

Some people rely on using ‘partner’ plans or borrowing from credit unions to meet the September back-to-school costs. However, these strategies might not be enough to take care of the regular monthly and term expenses that will arise throughout the school year. Continue reading Save Now for Back to School →

Spend Less, Save More

April 7, 2006Spendingbudget shortfall, expenses, finance, JamaicaCHS

“I really want to start saving, but I am not even making enough to meet my basic expenses. I work and go to school most evenings, so I don’t have time to try and earn another income.

“I’m tired of living hand-to-mouth and worrying that I have no savings. Can you give me some ideas to find extra money to save?”

The difficulty in finding enough money to save can be explained in two simple equations:
Expenses > (greater than) Income, or Income < (less than) Expenses.

You’re either living beyond what your income can provide, or you’re not earning enough money to finance your lifestyle. Similarly, there are really only two ways to solve the problem: spend less, or earn more.

This week we’ll look at the first option. You have stated that time is not on your side, so trying to earn more might be difficult right now. Therefore, you have no choice but to curtail your expenses and be smarter with how you spend your money. Continue reading Spend Less, Save More →

Rainy Day Savings

March 31, 2006Savingemergency fund, expenses, finance, Jamaica, redundancyCHS

“I’ve just found out that my company is going to be laying off some workers next month, and I think that I might be one of the unlucky ones. If they let me go, my redundancy payment would be very small and I’m worried that it won’t be able to last for long.

“The only money I have is saved is in an insurance policy, which I don’t want to touch. What can I do if I get laid off?”

As we say in Jamaica, ‘trouble nuh set like rain’. Sometimes problems don’t come with clear warning signs like dark clouds before a heavy rainstorm. While I hope that your fears are unfounded, it highlights a need for a savings plan to give you cash in the event of any emergency.

Financial experts say that you should put aside money to cover three to six months’ living expenses in case of a medical emergency or job loss.

Continue reading Rainy Day Savings →

Budget Wise

March 10, 2006Budgetingbudget, expenses, finance, JamaicaCHS

“I read last week’s column about budgeting and I’ve decided to give it a try, one more time. My problem isn’t making a budget, it’s sticking to it. I can’t seem to get my good intentions off the page and into the real world. As soon as I’m depressed or tempted to spend I give up. How can bring the budget to life?”

Last week we looked at budgeting as the foundation to building a solid financial future. Unless you have an unlimited source of income, (if you do, please let me in on that secret!) you’re not going to achieve all your big financial goals without taking control over your income and expenses.

When you live without a clue as to how your money is spent, you cannot plan from one month to the next. Little expenses come as big surprises. The budget is the blueprint that shows you exactly what costs to expect, and helps you to know beforehand if your income will be enough to cover them. Continue reading Budget Wise →

Budget Blues

March 3, 2006Budgetingbudget, expenses, finance, Jamaica, live within your meansCHS

“All the financial advice I read says that setting a budget is important. Every month I try to make a realistic budget, but it just doesn’t work. The figures never seem to match what I end up spending. I’m frustrated with budgeting and ready to give up. Am I doing something wrong?”

Relax. You’re not alone in your budget blues. Most people start budgeting with lots of promise, but within two weeks their plans get dumped like yesterday’s newspaper. As month-end approaches, they desperately await the next paycheck, sadly resolving once again to set their finances right. Then they get paid and the cycle continues.

Why bother with budgeting? Why not just spend as you go and hope for the best? Who really wants to have their lives dictated by the figures on a piece of paper, anyway?

This thinking is fine if you’re only living for today, but if you’ve ever dreamed about financial security and freedom from worrying about money, then a proper budget is the key that will open that door for you. Continue reading Budget Blues →

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