By Sylvia Juuko
We spend our adult lives juggling our businesses, careers and family. In all that, we tend to pay little attention to our spending habits.
It’s therefore no surprise that you often wonder where all the cash that we work so hard for goes.
If you paid attention, you will soon realise that your spending habits or choices have a significant impact on your finances.
Don’t get me wrong, spending is a fact of life. However if your spending pattern favours acquiring liabilities as opposed to assets that appreciate in value, it’s a potent recipe for financial disaster.
Take a moment to assess your day-to-day expenditure. Typically, your income is spent on food, transport, entertainment, utilities, fees, housing which are necessities to allow us function and maintain a basic standard of living. Ideally, necessities should be affordable.
However, the challenge arises if you cannot afford these necessities, particularly if your previous spending habits have encumbered your current flow of income or if it’s meager. Unless you efficiently manage day-to-day expenses, you will have a challenge meeting future expenses.
Some people argue that indiscriminate expenditure cannot be avoided because of the need to meet expectations that arise from a career or social status that one holds.
In this regard, frivolous expenditure is pegged to a lifestyle people project to their peers. For those bent on impressing peers, it is more embarrassing to borrow left right and centre because you cannot match finances to the image you are trying so hard to project.
As a start, make it a priority to know where all your money goes. This may appear easy but not many people consider it important to track their spending by keeping records.
For example by what percentage did your fuel or food bill go up in August in comparison to July? If you have not kept tabs on such details, you will keep wondering where your money goes. You can opt for the traditional way of keeping a small record book or use your phone to store such records.
In addition, assess all your bills in the last couple of months and considerwhether there are some items that are categorized as reckless expenditure. This will allow you to quickly recognise if you are losing control of your spending or not.
What has worked for some people is compiling a list all the things you want to purchase. From that list, marking off priorities in line with the financial goals and committing to timelines to achieve them. In addition to that, it’s critical to get good value for money for the things purchased by comparing prices.
Another thing to consider is that whenever you have financial pressures or your budget has become tighter, you can drop some expenditure until you get back on a firm financial footing.
We all know that there is some expenditure that is not essential. Drop that expenditure that is not essential until you are able to afford it. Concentrate on the items that you purchase without thinking, particularly if they cost a song. Over a stretch of time the costs usually add up.
Some people have issues in their lives which they think can be assuaged by spending. Unless you sort these issues, shopping till you drop will not be a solution.
The other trick that has worked for some people is that for everything you want to purchase, particularly the frivolous items, work out the kind of setback towards your plans for financial freedom and consider if it’s really worth it.
Remember that this is not a call for you to deny yourself anything. But if you are interested in getting your finances back on track, looking at your spending is critical. It all starts with prudently managing what you have. Unless you do that, not even a dramatic rise in income or a windfall will sort you out; your spending habits will lead you back to square one.
There is no short cut to taking responsibility for your financial future because life keeps changing on the back of an unpredictable local and global environment. It’s no longer business as usual and you need to make some hard changes.
We cannot predict the future especially the unexpected expenses, but life will be a lot easier we prepared for any eventuality.
The writer works with Bank of Uganda