The Budget Room

The word “budget” is often enough to send shivers down people’s spine, but in this day and age it is something that we all must look at very seriously. We all want and need different things and as we get older those things seem to get bigger and more expensive. Of course the line between wages, salary and affordability have grown at a rate so much so that most of us find it hard to keep up. Some people today find themselves needing to use the services offered by pay day loans providers simply to keep the weekly bills paid.

The one thing that is not taught at school, but should be, is personal budgeting. Sure we touch on this in economics and accounting, but unless we elect to take those subjects, we never hear about the need for personal budgeting, savings and saving for retirement. In our opinion this is a travesty, and is probably responsible for a lot of people getting into debt at such a young age. You only need to look back 20 years to a time when getting loans and living on credit was not the norm, to see that this culture we live in today has been fuelled by people who want everything now, and are prepared to mortgage a home to get these things. Twenty years ago, people would not be so ready to risk a major asset for the sake of smaller less essential items.

We are flooded with interest-free terms, low-cost finance, and other tempting advertising and there seems to be no restrictions on what these companies are allowed to do to make us think about going into debt to buy their product. It is shocking really! So for most of us it is up to our parents to teach us at a young age, what it means to put money away, to save, and to effectively budget what money we have coming in. When they are able to do this and do it well, we are able to understand more clearly the need to operate to a budget.

Small business does it, large companies do it, and the Government also runs to a budget. The banks expect us to know our budget when we apply for loans, and yet there are few places to gain the experience necessary to correctly implement a budget and then stick to it. Sticking to a personal budget, is one of the hardest things for people to do, and part of the reason for this is the fact that credit cards, payday loans, finance and in-store lending are so easy to obtain. It used to be that anyone under the age of eighteen years old could not get any type of finance without an older person acting as guarantor for the loan. This too has been slowly removed from reality.

By knowing what your expenses are, keeping them under control, and making sure that you never commit more than 80% of your total earnings to living expenses, you are able to move forward in your life to a point where eventually you will achieve financial freedom to do whatever you want to do, and when you want to do it, without the fear of not being able to afford it. Why pay someone else large fees just to borrow money to buy something you don’t really need?