Budget means different things to many people, generally thinking of
access to spending money. A 15-year-old student, on an allowance, thinks of
daily current expenses. A scholarship winner, studying to attend lectures and hand
in assignments, parties and thinks of funding the next party. A person in their
twenties with young children or suddenly made responsible for family
dependents, thinks of providing schedules. A financially trained individual
would focus on income, revenue generation and collection to replenish planned
expenditure. An academically trained individual, charged with the
responsibility of prioritizing national development goals, thinks of outcomes.
So, for all, what is needed is a guide that will help in this most essential
financial development.
That 15-year-old student may well be offered classes
in some type of money management or financial literacy, but at that stage of
life, most are taught to pass test, not to build habits. Budgeting takes a very
long time to be learnt and an even longer time to master. It is not about the
access to money (cash you have), it is about listing and prioritizing requirements
and requests (things you need or want, problems to be solved). Guidance
regarding necessities is to expose the things that are taken for granted, such
as; nutritious food verses tasty snacks, school clothes verses the latest
fashion. Curbing desires is about prioritizing needs over wants. (do you want
to eat when next you are hungry, or do you need these new shoes?)
The scholarship winner is sheltered or undercharged from
life basic expenses by prepayments, some even without the student’s knowledge,
agreement and understanding for future obligations. The outcome in such
circumstances is generally to earn some type of accreditation; a degree,
diploma or certificate telling others about talents and skills learnt. However,
in most cases, basic life lessons, about trust, time management and yes,
financial prudence, are learnt without the formal accreditation. The desire to
party is slowly replaced by the hunger for food, and ultimately, a plan is
formed to incorporate party with food, until party with food after studying
emerges.
The person, responsible for family dependents, is
going through a big change in responsibility, from being catered to, provided
for to being the one looked to as the provider. This individual is very
fortunate if there is guidance being offered and should take full advantage of
it. Now with Family; Healthcare cost including Food, Education expenses and the
purchase of assets, such as; House with its repair bills, contents, and
Vehicles with its upkeep, and exposed to hidden interest and depreciation expenses,
the desire for financial training kicks in. Turning to persons or institutions
you trust, please first as the question. (How will this person or bank make
money?) Noting that the better answer is (Only when you make money.) We pay
you.
A financially trained individual that practices
their training, in all aspects, inclusive of unplanned situations, develops
habits which lead to lifelong financial stability. Detailing annual expenditure
and seeking income which is twice or three time such expenditure, is common
advice. Income from talents and skills are generally how individual start off,
adapting along the way to earn more from Savings and Investments than from
mental and physical work. Savings & Investment, which can start off as
taking salary loans and advances and bonuses to prepay the next year utilities,
getting in the habit of using windfalls to clear future expenses, or as
purchasing equipment or vehicles which can earn income without your physical
presence.
Savings & Investment, professionally managed,
can mature into; borrowing to buy Treasury Bills or Notes at Discount rates, or
Government Bonds which has the potential to earn Interest Income to off-set loans
interest charges, as purchasing a house for the family that has the potential
to become three self-contained apartments to earn Rental Income. Building a
Trust fund, which generates Dividend and Interest Income, for specific
purposes; buying into Business Operations, purchasing of Income generating Assets,
savings to fund Education or Holiday Trips, investing in Pension Plans and Annuities
for Retirement Benefits.
Rationale
T.A.J
& Associates Company Limited
uses this occasion to comment on topics that have been covered, both academically
and by the mainstream media, to add its opinion and point out investment
opportunity, not to invoke any social action.
