My ĠEMMA Budget Planner
Last week, on the 15th of May 2020 we posted the following: “Budgeting: A lesson we must take with us from the COVID-19 Experience” The subject of our post today is once again on the importance of budgeting. Today we discuss 3 important steps that you should carry out during planning and managing your budget.

The first is that is important that together with your family you understand your spending habits and behaviour. We tend not to use money well – and most times this is the result of the fact that we do not bother to understand our money habits. Many of us tend to buy a baguette when we are at the office – rather than preparing lunch at home. A baguette that costs €2, over 220 working days will mean that in a year you would have spent over €400. Similarily during lunch or after work you may stop for a Latte or capuccino – resulting in a potentially equal spend. On these two items alone over 12 months you would have spent close to €1,000 – out of your disposable income. Similarily you may subscribe to a gym, to magazines amongst others.
Ask yourself: do you get full mileage from them? Should you terminate these subscriptions? What equipment do you use at the gym – threadmill? Weights? Should you buy these and train at home. Are you an impulse spender – where-in you spend to feel good rather than whether you buy what you? Analyse your credit card statements, your bank statements, what you do with your cash and loose change. Understanding your spending helps you tightening up on non essential spending. Understanding your spending behaviour allows you to adopt money spending techniques: for example, if you are an impulse spender leave all your cards at home, and when you go out just take cash and no more then you really need.

Second, make sure you separate wants from needs. The key to good money management, any time, though more importantly during COVID-19 given the uncertainties we face, is separating needs from wants. We do not know how long this crisis may last. It may be that as we speak your job and income is not affected. What guarantee is there you will not be affected 3, 6, 12 months from today? Identify what is necessary to you and your family and limit your spending on these necessities – food, education, your home. It may be great to go on a holiday after being locked in for so long: but surely is this the most important thing to you and your family right now? Once you cover the essentials – the needs – put your money aside and build, and if you already have strengthen your Rainy Day Fund?
Remember, almost everything you buy involves a need vs. want determination and ultimately, how you make these choices determine if you reach your goals or not. Do you need two cars – with all the associated costs that go with them: insurance, registration, etc.? If you have up to recently been ringing somebody in on a regular basis to help you clean your house, is this something that within the current environment and in the post COVID world you could do yourself? Keep in mind that whilst you can almost anything you want; you just cannot afford everything you want.

Finally. Involve all of the family in planning and managing the budget. This is not something you should do on your own. Getting the family together in planning the family’s budget and reviewing the family expenses helps all family members to understand the reasons of why priorities are required, why the focus should be on needs at this stage and not wants, and why the family needs to change its spending patterns and habits. Understanding why the family must tighten its belt is more likely to result in the family pulling together. At any time agreeing on the family budget is really important – and it is even more so today when faced by difficult money situations that require you with your family to zoom down on your priorities.