Wednesday, September 22, 2010

Interview with the Nigerian Tribune on Budgeting

1 Can we meet you?

Oluyemi Adeosun, a native of Ilesa, Osun State is a graduate of Economics from the University of Ilorin. I have a Masters Degree in Economics from the University of Lagos and recently concluded my MBA programme from the prestigious Obafemi Awolowo University, Ile-Ife. I am a member of of the Project Management Institute,USA and Toastmasters International. My work experience cuts across telecommunications, Consulting and, broadcasting. I am an author, broadcaster and public speaker and I blog on Presently, i produce and present motivational programme twice weekly on Gold FM 95.5 Ilesha Osun State (5:55am Mondays & Wednesdays) and once weekly in Yoruba language on Amuludun FM 99.1 in Ibadan (8:30am every Monday) for an NGO (Young and Excellent Club) as part of my contribution to adding sustainable value to the society. I am very passionate about People management, Project management, Organizational development, Social entrepreneurship, Youth development and Good Governance

2. In your recent write-up, you talked about budgeting, what prompted this idea?

The recent global economic meltdown with its lingering effects which included loss of jobs, salary cuts amongst other things shook a lot of individuals; a lot are yet to recover from it. In the wake of the recession, it became obvious that people especially salary earners /workers survival depended a lot on how much savings they had. You can’t save if you do not make financial arrangements to do so.
Economies flow in a cycle from prosperity to recession (or poverty) and vice versa. Budgeting helps you to navigate through the changing season smoothly. Budgeting isn’t a gift rather it is an art that has to be learnt that is why it is referred to as “the art of spending wisely”. A money plan is called a budget and it is crucial to get us to our desired financial goals. It is a time tested and trusted method of enhancing the ability to live within ones means. Without a plan we will drift without direction and end up marooned on a distant financial reef.
A good budgeting plan helps to guide ones financial path as it helps to set up guidelines for reaching our goals. The import of this is that you will be able to control your money and not your money controlling you. This mindset prompted the need to encourage people in that very important aspect of life which a lot of people neglect-art of budgeting.

3 Why do you think Nigerians have problems with budgeting and savings?

There is an African Proverb that “Those who don’t have to watch their spending got theirs by watching it” How much you make is not as important has how you spend it. I have been opportuned to come across people who earn approximately the same income but have different standard of living five years down the line. I know we live in a consumer-driven economy and broad array of products and services are available in the market. I am also aware that it is sometimes difficult to resist the temptation (“of buy me now”) of spending money through Impulse buying and spending. You have to be an educated consumer i.e. someone who knows how, why, and when to spend money. A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending. A lot of people have found themselves in debt and deep financial mess today because they fail to budget and also do not live within their means. Most often than not, the cause of Nigerians having problems in budgeting and savings is impulse spending and engaging in mundane things of this world. We want to attend every party, we want to buy every aso-ebi, every jewelries brought to us without factoring which is really important. There is a need to prioritize and save for the rainy day.
Managing money through budgeting is a proven method of becoming a prudent consumer. There are a whole lot of techniques out there that could be utilized to make the best (use) of your money; they range from the mundane to the sophisticated – it all boils down to how we apply how heart to what is needful.

4 What do you think are the basic steps or simple tips to having good budgeting?

Draw up a budget, stick to it, be prepared to make adjustments in your lifestyle or spending habits and pay yourself first by saving regularly.
Save through payroll deduction and take advantage of any employer-sponsored savings plan – deferred compensation, retirement accounts, etc. Use a piggy bank to keep your loose change.
Keep an emergency fund and save any bonus income you earn. Consider whether it is worthwhile to have one or two incomes, if you have childcare expenses.
Protect your vital assets adequately; home, cars, personal belongings, business, life health etc. – “a stitch in time saves nine”. Carry only one health insurance plan for your family and save on premium payments.
Car pool when and if possible and use public transportation.
Learn to do basic repairs or fix simple things in your home, such as decorating, painting, changing light bulbs, etc. the savings would amaze you – check out major home improvement outlets for class schedules.
Keep lights off when you are not in a room, buy long-lasting energy saving bulbs and appliances – don’t be “fuelish”.
Conserve and re-circle every material that you can. Use glass instead of paper cups.
Pack your own lunch as often as possible and cut down on meals away from home. Buy in bulk if discounts are offered. Minimize on snacks or "junk food”.
To stay healthy, develop good health habits and consider the cost of addictions. Learn to take temperature, pulse and respiration. Learn about symptoms of common diseases to determine whether to see a doctor or not.
Learn to give sensibly - give of your time and assets or merchandise when possible instead of always giving cash. It’s not compulsory you buy the ‘aso ebi’ of every dick, tom and harry. Learn to say no to what you can’t afford and don’t need. Set reasonable amounts for children's allowances and encourage them to save – let prudence be a family habit early enough. Watch your credit limit.

Prudent Man-Prototype Budget
Total Income – (100%)
Savings- (10%)
CHARITY/Giving – (10%)
Transportation- (10%)
Housing- (10%)
Sustenance- (30%)
Investment - (20%)
Continuous education- (10%)

5 How can somebody earning, for example, N20,000 budget and save in the present Nigerian environment?

First and foremost (the act of saving) savings is a mindset. If you believe you can save, then you will. 20,000 naira is not a lot of money; however, it is not too small either to save out of to save out of. That is why I recommend that people should use percentage to allocate their income whatever the figure.
It is best to save first and spend what you have left and not the other way round. Proper Planning will give one financial rest. It takes a lot of creativity and self-denial or delayed gratification to live within ones income. I know quite a number of people who earn less than 20,000 naira and yet drink many bottles of alcohol on a daily basis. People do things that are priority to them. Once any demand is more than the budgeted amount for that sector my advice is that the demand should be delayed till when it can be met or out rightly forfeited. There's a saying that "you can't help but think about the future because you are going to spend the rest of your life there".