HOW TO GUARD AGAINST BAD SPENDING HABIT Jun 20, 2018 13:42:27 GMT 1
Post by Ismail AbdulAzeez on Jun 20, 2018 13:42:27 GMT 1
In a cash based economy, avoiding unplanned spending is not a very easy task. Oftentimes, there is a feeling of excitement and perhaps self-fulfillment when we bring out wads of notes to pay for goods and services. And in most cases, such expenses are not always subjected to 'need analysis' or provided for in budget.
Budgeting is one of the surest ways of reducing unplanned spending. If entrepreneurs and business organisations do not imbibe the culture of spending by design, and within a permissible ceiling, their disposable income and working capital would be severely eroded. And experts say this can ruin the fortunes of individuals and business organisations and result to embarrassing heaps of debt.
The Head of a Research and Strategy, Securities outfit, says avoiding unnecessary spending starts with developing a sound, strategic spending plan, adding that this would help to put flesh around the areas where the business lack competitive advantage.
He says, 'The plan should be followed with a budget which quantifies all the actions in monetary terms. The budget should be as clear and practicable as possible in order for it to be achievable".
He notes that although it is necessary to keep to the budget, an entrepreneur or business organisation should, however, be flexible to make room for an unforseen occurrence which was not envisaged during budget preparation. He stresses that the decision to deal with situation should be rational and not emotional.
According to him, "Most business managers are fond of making financial commitments without considering the economic importance of their actionable. While it is agreeable that not all expenditure come with financial benefits, the non-financial benefits should be determined before disbursement".
An investment analyst, says unplanned spending can easily lead a business organisation into debt trap. He says, "When individuals and business organisations fail to adhere to a spending plan, they are tempted to pursue fanciful but unnecessary projects. And when important projects show up, they end up borrowing. So in order to avoid unplanned spending, individuals and organisations should develop a spending plan and to keep to it".
However, experts say individuals can curb unplanned spending by preparing a shopping list; avoiding social shopping; reducing appetite for trendy items; creating major spending projects and carrying less cash.
They stress that when an individual carries wad of banknotes in his/her bag and heads for the shopping mall, chances are that the person may buy more items if he/she has no shopping list. For instance, in a loaded shop with a variety of enticing items, it is difficult to trust that your instinct will control your expenditure. Therefore, the way out is to prepare a shopping list and abide by it. Then, target what you came for, deal with it and leave the environment.
Roaming the shopping mall will expose you to all the captivating goods that have been cleverly and strategically positioned to entice and stir your buying impulse. So, the less you feast your eyes, the better for you.
Avoiding social shopping is one of the best ways of reducing unplanned spending. Social shopping is the type of shopping one does in the company of friends, which is like a social outing. By engaging in social shopping, you may be influenced or pushed into buying what you did not plan for. If you need company, maybe for a second opinion on choice, one trusted person, who is responsible at spending, is the kind of companion you need. If you have to go with a group, then you must be mentally prepared to work with your budget and resist covert or overt pressures to buy certain things that may be out of your budget, list, income range or even need, just because others think you should.
Choose where to shop. Don't go to an overpriced outlet just because it's where the big boys and girls go to shop when you can get the same items cheaper at a not-too-popular outlet. If you know the prices of items are exorbitant where the big boys and girls shop, then you don't have to sacrifice your meagre income just because "you want to belong". Reduce appetite for trendy items. A lot of impulsive buying goes with chasing after the latest models. It is good to have something "new and smash", but you don't have to be the first with every new product model. Most times, the so called latest models are just existing ones with minor changes.
Avoid 'buy now and pay later'. Some mobile marketers are fond of bringing things for you at home or office to buy. And because they know you personally, they may lure you into buying by allowing you to keep the items with the grace to pay later. Deferring the payment for few weeks or months does not mean that you will not eventually pay for it. In most cases, you pay far more. The best option is for you not to buy off your budget. And to achieve this, you must begin to learn how to say 'no', politely. Don't buy to please, buy because of a planned need.
Create major spending projects. It is the dream of every entrepreneur of business organisation to accomplish some landmark projects, such as building a new house, or production plant.