Budgeting: the sure way to secure your future

By John Kariuki

Parliament will allocate the Independent Electoral and Boundaries Commission (IEBC) a shoestring budget of Sh17.5 billion to conduct the forthcoming general election.

Parliament has forced the IEBC to reconsider its estimates twice from the initial Sh41.4 billion it had requested down Sh17.5 billion.

In its revised budget, IEBC has excluded Sh5 billion for a presidential re-run and reduced earlier estimate for legal expenses and voter education.

The IEBC Chairman Issack Hassan is quoted as saying that the commission will be forced to make huge cuts in its expenses and make the Sh17.5 billion budget work.

He says that the IEBC will considerably reduce the number of polling stations. Other measures include signing up less temporary staff and hiring vehicles instead of purchasing new ones.

By making the huge cut of Sh23.9 billion in its estimates, a whopping 58 per cent reduction from its original budget, the IEBC demonstrates gargantuan creativity in managing with fewer resources.

And herein is a vital lesson in personal finance management. With the current high inflation, people should be creative in their saving schemes to cope with the high cost of living.

solid goals

According to Humphrey Thuita, a Personal financial banker with a local financial institution, the first step to saving is to have solid money goals and a stringent budget.

“Goals spell out the destination and a budget spells out the details of the journey,” he says.

He adds that a budget ensures that one keeps a steady sum aside regularly towards attaining these objectives. A budget is essential in a person’s life as it shows one about his or her income and spending.

In the course of his work, Mr Thuita has seen a client take extraordinary measures to regain control his finances and jumpstart a saving culture.  “This client was falling behind on his loans repayment and we had a little discussion,” says Thuita.

In their talk it emerged that the man would be permanently in debt unless he got a better paying job or made drastic cuts in his spending.

“His was a classic case of debt cycle where some people borrow from their Saccos to offset bank loans, and vice versa, depending on where they are creditworthy in unending cycles,” says Thuita.

“With the enormity of his situation stark in front of him, this client vowed to relocate back to the rural area, where his farm lay idle,” says Thuita. He took a transfer from town to work in the rural areas. Within three months he had adapted to his new life and was able to devote 60 per cent of his salary to loan repayments, adds Thuita.

“The most creative part of his strategy was to grow his family’s food, selling the extra, and fading away completely from his usual entertainment points,” says Thuita.

The man used his ample time to write books which increased his income exponentially when they began getting published, adds Thuita.

“He would deposit huge sums in his loan accounts and these eventually cleared all his debts, years ahead of their terms,” says Thuita.

With the loans burden off his shoulders, adds Thuita, his client directed his energy in saving for a property in town and which he acquired in no time.

Wesley Chuma, an employee with a state corporation in one rural town, says that he had been stagnating at one point for several years.  “I was neither improving on my life nor getting worse despite frequent salary increases and an extra shilling I was making on the sides,” he says.

Chuma took out a calculator and reviewed his financial goals. “I did a soul search and discovered several areas where I could make drastic cuts to put my financial goals in focus,” he says.