It’s a good time to revisit the topic of budgeting given the recent increase in fuel prices. This will not just affect our transport costs but will translate to other areas like electricity, food etc. We need to go back to the basics and look at our expenses so that we don’t get surprised.
How can you stretch that shilling?
1. Have a budget in the first place. When you don’t plan your spending in advance, you are really groping in the dark. We avoid looking at the numbers hoping something somewhere will fall into place. A budget makes you aware. If you have no idea how much you spend on things, track your expenses for a month and you will come up with a pretty good idea. You may be complaining about the increase, but you waste money on other areas that are not important. Rising expenses can result in living beyond your means. You then find yourself borrowing to make ends meet. The cycle will never stop. Even if you will not end up living beyond your means, you are probably being extremely wasteful in how you spend money simply because you don’t know.
2. Be proactive and cut your costs. Rising expenses means something has to change. If fuelling your car is going to cost two thousand shillings more, that money still has to come from somewhere. Identify that ‘somewhere’. You may find more costs to cut by actually knowing where your money is going. One, reduce on needless trips as much as possible especially since transport is the immediate impact of this increase.
If you go to the supermarket often, consider doing some bulk shopping to reduce the number of trips. This means having a better plan which helps in reducing fuel expenses. Mechanics have told me that cars are very inefficient when running on quarter tank. It pinches in the beginning but filling your tank is better for your wallet. Look at the various items in your budget and see if there is a more efficient way of doing things.
3. Do not skimp on your savings. It is very tempting to cut down on your savings at this point. In fact, that is what most people do. But think about it this way. The more expensive life is, the more you need to save and invest. If the goal of your saving was an emergency fund that can sustain you for 3 months without an income. You will need way more. You will need more for retirement, school fees etc.
We like to say in Centonomy, try and protect your factory i.e. your assets, savings and investments that work for you. This increase will be passed down to consumers as companies try and protect their own factories. To ensure you don’t cut down on your savings, save first. When money comes into your account, let an amount go into savings immediately where you can’t access it easily. Then, spend what is left. In the greater scheme of things, it doesn’t matter how much went to electricity, airtime, fuel or food. It matters a lot more what was saved or invested. If you need to cut airtime to buy fuel then do it.
4. Earn more. Long term, you can’t keep cutting costs without an increase in income. In our classes, we help people plan to increase their income because it’s probably the most important part of the financial plan. Keep your expense in check but be just as concerned with what you need to do to earn more. What value are you delivering at work to get that increase? What do you need to do in your business? Do you have some free time you can put to good use over the weekends? What hobbies can you use to make some extra money? Can your side hustle become an actual business?
5. Last but not least, ditch the poverty support group. I’ve written a longer article on this before but these are the people who will waste way too much time complaining about the economy, sending negative messages etc. For most people this will not help them keep food on the table or their businesses alive. Focus on what you have to do.
Waceke runs programs on Entrepreneurship and Personal Finance Management. Registration is currently open and ongoing through our website centonomy.com For more information get in touch with her through waceken@centonomy.com /Facebook-Waceke Nduati /Tweet @cekenduati