Have you drawn up a personal budget for 2014?

Pay-day is around the corner. It is going to be the first pay-day of 2014. Before you start spending, have you drawn up your budget for 2014? Budgeting is not only for the government. As an individual or family, you must also have a budget.


How much money are you going to earn this year and how much are you going to spend? It is important you determine that now before you get your first salary of the year 2014.

Your budget should have a detailed expense account that should include your rent/mortgage, food, car maintenance/transportation cost, entertainment, travels (if any is planned), any interest to be paid on any outstanding loan and due principal among others. Your budget should be as detailed as possible. Ensure you do not leave out any significant expenditure. 

You should also set your spending priorities for this year. Do you plan to buy or build a house; do you want a new car, move to a new house or go back to school? Decide on your priority expense for this year, estimate how much it will cost  and determine how you are going to save towards it from this month.

Three reasons to draw up your 2014 budget

It helps you get a clear picture of how much money you should expect in the New Year. For example, if your take home pay is N100, 000 monthly, multiply this by 12, and you know that your total income for 2014 is going to be N1.2 million. Your take home pay is your salary less any compulsory obligations like taxes, pension contributions and even loan repayments. Knowing what you stand to earn for the year, will help you determine in advance what you can afford this year and what you cannot afford and allocate your expenses accordingly.

Estimating your annual income and expenses at the beginning of the year will also serve as an early warning, if you are going to run out of cash sometime in the year. For example, if you realize that your income for the year is going to be N1.2 million and your estimated expense is N1.5 million, then you know that you will have to find an extra N300, 000 to boost your income for the year.


Drawing up your budget will also instill some sense of discipline in how you spend your money throughout the year. A clear idea of your annual income in 2014 will force you to cut off any expense that is not within your budget since you will know that may mean you will not have money to undertake other necessary expenditure.

Making your budget now will also help you determine if you have to diversify your source of income or get a new job. It will increase your consciousness about your potential earnings for the year and improve how you manage your available income to achieve your desired goals.

Finally, remember that your bank should be your partner in the financial planning process. UBA, for example, can support you with a “No Wahala” personal loan of up to N3 million to enhance your budget for the year, just in case your planned expenditure exceeds your potential income. However, any decision to go for a personal loan should be carefully considered, since you must repay with future income. So, you must ensure that your future income has the capacity to repay without significantly impacting  negatively on your lifestyle. 




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