Your Finance in the Festive Season

With the excitement, spending spree and pressures on personal income that come with festive seasons, financial experts recommend that they be treated as a budget period.

By 'budget period', it means that though the individual has been running a budget (maybe the yearly plan), he has to make a review or adjustment to accommodate the fresh demands of the festive season. Those demands most times were not anticipated in the master plan and so were not provided for. The exception will be where one is not part of the festivities and the excitements.

With the calendar almost in mid November, many people are beginning to think about the year-end, or Christmas festivities. At the community and family levels, various cultural activities might have been lined up, which were not anticipated and so bound to task your pockets. You may have also discovered that your family or loved ones need a holiday or special treat, because you have made money, beyond what you initially projected. To most people, it is just natural to run a deficit budget at year-end, or in festivities. In as much as the bloated financial demands of the season have to be accommodated, experts advise that they be confined to the original financial goals, set by the individual for the year.

A worker could have been ridden in debt the previous year and had set out in January to end the New Year with a positive net worth. That is a lofty goal that has to be kept, not affected by festivities or the season.

This week's cover is done with the intention of guiding readers facing the challenges of bloated needs that come naturally at year- end or in the festive season. The cover has the features of a 'module, intended to help individuals stick to their financial goals and come out of the season a financially healthier person. It starts with proper budgeting and control.

Why The Budget?

The budget is a comprehensive and coordinated income and expenditure plan. The process of budgeting is setting up and using budgets for planning and control with the ultimate objective to accomplish goals.

The goal is that purpose for which one sets out to work. For most people, the goal transcends the provision of the basic necessities of life for oneself, family and dependants, to all the things that guarantee quality living for today and tomorrow. Budgeting permits constant and periodic comparison of current financial position with the stated goals. The moment there is a budget, the individual can control his expenditure and will, more likely, achieve objectives.

"Though one has to meet the finan­cial demands of the festive season, one has to guide against waste. Spending in the season on a scale of preference, the ordering of wants in their order of priority is very handy," said Edwin Madunagu, managing director of Target Investments, based in Lagos.

Madunagu said "adequate cost and benefit analysis should: go into preparing the festival budget, so that one does not waste in a second what one has taken an age and fortune to build.

"The cost of buying should always be weighed against the benefit of spending on that item. If the leisure of buying a car for Christmas, for in­stance, can be quantified to N100,000 in one month, while the alternative cost is the loss of N500,000, one would have realised taking advantage of investment opportunities in the season, then it does not make economic sense to embark on the former. "Opportu­nity cost in terms of foregone alterna­tive should always be compared to the money cost when budgeting for the season," he added.

Not minding the heavy expendi­ture commitments that come with the festive period, when people have to travel to long distance places, spend on the extended family and community projects, financial management experts still advise that about 10 per cent of total earnings within the period should as usual go into savings and investments. But where that is impossible, such as in an emergency situation, it is understandable."

On a general note, whenever planning, spending or saving during the season, the following tips, experts say, should be considered and adhered to.

• Make a spending plan before making financial commitments for the season. Once you have put a Naira figure on what you will spend, it is recommended that you stick to them. It is important that every expenditure corresponds, with the plan. All forms of in­cidental expenses on the spur of the moment should be avoided by all means.

• After the budget has been made, the individual might get a windfall (large income that was not expected or not worked for). It is advisable to still stick to the original spending plan and put the extra in savings.

• In making the spending plan, it is recommended that the individual factors in core expenses that might surface later, such as mortgage or rent payments, utilities, food and nutrition, child care, insurance premium, pension commitments and so on.

• Ta ensure you come out of the season with your packets unhurt, consider trade-offs (that is shifting money to higher priorities, such as saving for personal or children's education or providing for retirement). Overspending on areas that are not readily important far survival or personal well being such as outdoor entertainment, travels, luxury fashion and accessories do not seem to pay.

• Make a total of the expenditure projections far the festive period and compare the figures with the total income expected far the period. If the expenses are in excess of the income, it might be necessary to make adjustments (particularly when fuelled by discretionary expenses). It is not financial commonsense to consume everything that is earned within a period.

• If the festive budget is too large that cutting expenses appear very difficult, buying some items on lease or through consumer finance may help to save money.

• As you implement the seasonal plan, always compare what you planned to spend and what was actually spent, and endeavour to make corrections where necessary before the curtain is drawn.

• Believe it as matter .of religion that if you intend to live in robust financial health, guide your money properly to go where it is intended.

• The amount .of money or assets you have in future will depend on what you do with your resources today. Every individual is responsible for the amount of money he earns and for the amount of money he spends. Successful money managers central the way they spend. They use money to accomplish important things. Good money managers manage their money, rather than letting it dribble away.

·The festive period is not a time to waste all that one has laboured for in many years.
Remember Benjamin Asuquo in the book, The Truth About Money and Life. He said, the way you spend your money today will determine what you have months from now; a year from now, five years from now and in your lifetime.