Most people would agree that it is very important for governments as well as business concerns and other institutions to have a workable budget in place. Without this financial framework, any institution could easily outspend their revenue stream and quickly amass substantial amounts of debt. There would be no checks or balances in place to prevent overspending from taking place on various levels. In addition, it would be very unlikely that appropriate funds would be available should the establishment run into unexpected trouble and have a need for immediate capital. However, for whatever reason, many people do not realize that these same principles apply to each of our personal lives.
There has never been a bigger need than there is today for families – basic social institutions – individuals to establish personal budgets. In the long run, modern and inherently expensive ways of life today and ever mounting prices have raised the average levels of income that is now needed to just survive. This translates into a need for savings at a time when many people are forced to live paycheck to paycheck. The best way to handle these factors as well as many others is through the establishment of an effective personal budget.
Budgeting helps you better understand how you spend your money each month. Budgets also help you meet goals and prepare for everything from a new home to an overdue marriage of young daughter. Governments and corporations have to make their budgets once a year whereas people living under the burden of crushing cost of living have to under go this exercise every month. Given the resource constraints, making personal budget is very tough.
On the eve of announcement of annual federal budget the Review, instead of predicting and analyzing the realities after sifting from budgetary rhetoric this year took a chance to see how people make their personal budgets. Or do they, in the first place?
We asked three persons from different segments of our multi-classed society – a serving bureaucrat in grade 20, a mali (gardener) in pay scale 5 and a retired officer with a large family — to account for their monthly income and spending. It is very revealing.
“I am serving in judiciary and am taking home around rupees 30 thousands per month, started narrating M.A. Khan, “Other than my pay, I have no sources of income whatsoever. We are a small family of two college going children, my wife and me. Most of my income goes for college fee and children education expenditure. Both my children are in professional colleges and I have to pay rupees 13 thousands per child per semester for fee plus their pocket money, cost of books and convenience to and from campus. I only pay rupees two thousand per month to my mother who does not have any other source of income and lives back in the village. My wife does not like this and overly says that we cannot afford this.”
My wife also serves as an untrained teacher and brings home rupees four thousands per month. Thinking that I am never likely to lay my hands on big money in my life for marriages of my children, she saves her money and does not spend even when needed. I keep telling her that we will have enough to marry off both of our children when I will retire and get my pension and other allowances accumulated. She says that it will not be enough and them she craves for buying own home as
We live in a government apparent but have to pay for the utilities. Medical facilities too are free. My personal expenditure are very limited, some books, some stationary and envelops for writing letters to friends or some money to offer tea to any one who comes to see me in the office. Besides this, I give every penny to my wife to run the home – food, clothing, utilities and any thing else including guests. There is no saving for the future and for unexpected expenses.
In theory, I agreed that a budget could improve married life. A good budget is not just a spending plan; it is a communication tool. Done right, a budget can bring the two of the spouses closer together as they identify and work towards common goals and reduce arguments about money. But practically speaking, it is not very simple. See that none in my family is happy as it is. My children want to go to college in a car (I have an official transport but the fuel is only enough for me to go from office) and both of them want to have newer and better things (mobile phones, computers, trendy cloths), my wife wants to change furniture items and curtains and keeps dreaming of owning her own home. How should I evaluate my fixed income and make the budget to cater for needs and wants that are ever increasing?
On the other hand, there is a gardener in a large public organization who draws a little more than rupees three thousands and has a large family of six. He says, “Ever member of my family is happy.” I have only one problem: the loan I got from my unit when our house collapsed during rainy season last year. We are paying back installments and I will be comfortable when the loan is adjusted. We also have a buffalo as well. We get additional income when buffalo starts giving milk that I sell. I bring the fodder for the animal from where I work.
My wife is financially very wise and she makes her budget meticulously. She intends to save by investing in ‘mohalla committees’ when our loan is adjusted and buffalo start giving milk. She wants to be a wife of Lakh Patti. What I should have done without her help?
Personal budget making is the toughest for the retired personal that in the absence of any social securities or welfare or reasonable saving schemes in the country are left to fend for them on pension alone.
Karim Dad is a retired army officer. He spent all what he got after getting his pension accumulated at the time of retirement to pay for his home. Now he has own home and nothing else. He has five young children, all school and college going, and only pension to live on. He needs to play his second innings and keeps trying to get a job but irony is that “there are no openings in the country. I retired at the age when my social obligations are at their peak. I know how to evaluate and plan things but trying to fight my personal battle is different,” says Karim Dad.
I will end with one from a poverty punch: An old lady named Suban, in her late 70s may be, she did not know her age, lives alone with no male member to look her after. Having lived all her life in the remote village in district Chitral, her total possession is three goats she had. She takes them out for grazing every day and also performs other domestic chores single-handed. She is healthy, active and happy with life. I once asked her about how she manages her expanses (read budget)? On coaxing she said, “I will be happier if my goat delivers three lambs this time.” Surprised, I asked her to explain. She said, “I will sell the lambs and put a new roof on my home and will sell all the milk to live comfortably!” Her budget was simpler but life certainly was tough.