The Bad Bitch That Was In The Budget
In my wildest imagination, okay maybe not wild nor imaginary. The thought of this came to me while drafting my monthly budget. Call me old school or typical accountant but I believe that what gets measured gets improved. Now I’m not saying measuring earthquakes on the Richter scale will evidently advance the magnitude of all tremors.
Any budget contains line items which represent the type of planned expenditure you will be reserving money for (see below Picture of normal line items in a personal budget).
Now it isn’t a lie to say that most of us do not spend our money wisely, nor is it another lie to say that we do not have monthly strict budgets that we live by with the hopes of saving up for that rainy day. I keep one but even still, sometimes I slack off in terms of staying disciplined with my spend, wouldn’t say acceptable but in this day and age having a budget to start with is half the battle won.
Anyway, the main question I had in mind when drafting this article is then given our monthly spending habits, if we apply the ABC rule of costing.
“Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each.” Wikipedia
Given that we don’t plan our spend, just how would our true budgets that we do not really confess to, just how does it really look like? Well to answer that, we brought in our favourite Baller being Sipho to help us learn from his mistakes before we make them.
You see Sipho lives on a month to month salary, he keeps charging his overspends to his credit card which is fast approaching its limit. He isn’t at all aware that he spends so much money on entertaining his friends and random girls he keeps meeting while partying during the weekend. Almost 50% of his Net income is spend on impressing girls and alcohol. and the worst thing is, he ins’t aware of his spending habits, he claims to have no idea why he’s always broke.
Going on each month without a spending guide might as well be as bad as living with no standards, or choosing not to believe in anything, you are more prone to fall for anything.
Just how does your true budget look like? who is the biggest beneficiary in your budget? where does all your money go? Do you always wake up each Sunday and look at your bank balance and immediately go into an imaginary cold self induced coma of disappointment? Do you have a monthly budget you abide by? Do you have a yearly plan of where your hard earned money will go to? Got an expensive car and deep credit? are you old and still living with your parents? Just how do you plan to pay back your loans and departmental store accounts?
Being a Financial Analyst I do a lot of variance analysis and what I have seen is when you keep track of the overspends you have on each line item and make notes on why you overspending you eventually start being aware when a new month hits of the things that cause you to sway off your financial lane.
Below is a normal excel sheet that shows how to go about planning your monthly expenditure and keep track of overspends, it can be drafted on an excel file or a piece of paper. so anyone with a smartphone, tablet or computer can create one. You may use this as a template. Go ahead, the winter is coming!! and the ‘bad bitches’ are always waiting for that one lost brother that puts his self esteem not in conversation but places it in his wallet. Substituting game with money.
A budget is not just a collection of numbers, but an expression of our values and aspirations.