Whether we are talking about financial budgeting and planning
for you personally or as a business, it is important,
particularly in times of recession. There’s no point in waiting
until the recession hits you before you make a budget & plan,
because by then it will be more stressful to implement it.

So what is a recession? Basically it’s the slowing of economic
activity over a continuous period of time. In a recession, job
losses are a major concern and this is one of many reasons why
you should prepare yourself with a financial budget and plan.
For a business it’s important to know where they stand in the
current market and what expenses they need to prepare themselves
for. With economic activity slowing and people not purchasing as
much in a recession, it is likely to affect business
incomes.

With it being so easy to get loans, credit cards and store cards
these days it is also very easy to find ourselves in more debt
than we anticipate. Many people simply use one credit card to
pay another credit card or other bills; therefore, the debt cycle
is forever revolving. The word ’savings’ has become something
which many see unattainable.

An important step in financial budgeting and planning is to work
out what your debts are compared to your income. This is where
good budgeting and planning comes into its own by providing an
accurate structure with which to work things out. No awful
surprises if you do it well. In simple terms, if you have more
cash outflows than what you are earning, you are living beyond
your means. If this is the case then you need to know about it
straight away and with good planning, you have a chance to do
something about it. It’s important to reduce as much of the debt
as possible, in order to have some money left for your general
living expenses:  food, gas, utilities and the likes. From
here you should get yourself into a routine of saving the so
called ‘left over’ money, even if that means a mere ten dollars
a week as that can add up over the year.

By having some money saved (that you can’t readily access) you
are creating some financial security for yourself. Imagine if
your vehicle broke down and you didn’t have savings:  Would that
mean that you have to get finance to get a new vehicle or repair
the one you have? If so, then you would be putting yourself in
more debt, whereas if you have some savings behind you, you are
prepared for unexpected expenses such as this and the
possibility of losing your job. You should make savings goals.
For example, your first goal might be to save one hundred
dollars and if you do so then you will treat yourself to a meal
out or doing something you enjoy (that doesn’t cost a fortune!).
Start with small goals that will be achievable – otherwise you
will find it too hard to save and most likely give up within the
first few weeks.

Financial budgeting and planning also includes looking at your
expenses; consider things that you can do without. It doesn’t
necessarily need to be something you have to do without for the
rest of your life, just something that you can do without for
the time being so that you can save some of your hard earned
cash rather than spend it on materialistic things. For
instance, do you really need that second mobile phone? Or that
daily store bought coffee every day? Small things like this can
make a difference. Add up how much you are spending on things
like bought work lunches, mobile phone bills, petrol/gas costs, etc.,
and you will soon be surprised!

Another thing which many people overlook are insurances. Whilst
this might seem like an unnecessary step in your financial
budgeting and planning process and just ‘another expense’
consider this: When times get tough, things like getting sick
can break the bank! Health / Medical insurance can be extremely
useful and save you a lot of money in health costs. The likes of
income protection insurance can help if you lose your job. The
more you can do to protect yourself from unexpected costs in
recession times, the better!

The sooner you get onto financial budgeting and planning the
better – prepare yourself today for the future. Don’t just wait
and hope.

About the author:

John Lay

iAgri Ltd is a market leader in farm and small business management software, to assist with financial budgeting and plannning. I.Agri export to many countries around the world. http://www.iagri.com/

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