Everything in life comes with a price. Not everybody is fortunate to have money to spend lavishly on needs as well as wants. Managing your finances is essential for survival in today’s rough economic times, particularly that of Saint Lucia. The introduction of VAT in October 2012 caused many residents to rethink the way they spend. Inflation is extreme and many persons (as small as their salaries might be) saw the value of the dollar decrease. With the probability of an increase in salaries less than imminent, you have to re-strategise on what and how money is spent. This article seeks to give some ideas on how to manage your finances properly.
You should create a basic budget using a sheet of paper showing after tax and NIC deductions monthly. This budget should have a breakdown of expenses for the month. These expenses should be broken down into categories, namely: rent/mortgage, bills, insurance, food, transportation, savings and entertainment. In doing so, you will have a clear indication as to how your monthly income will be spent.
When you get a salary, the first thing you should do is set aside monies for rent and bills. For mortgages, many banks now make it mandatory to have a salary assignment attached to that loan; so when the salary is deposited to your account, the loan is automatically paid. If your bank does not offer this service, set up a standing order so that you can have these monies transferred to your loan account when your salary comes in. This is a good step in ensuring that you pay your loan on time, thus avoiding late fees and interest charges. Secondly, pay your rent on time and in full. In order to decrease the amount of rent that you pay, find a friend or a roommate to rent with you. If you are married and have a family, it is best that you and your spouse budget your mortgage or rent accordingly so that you both know what percentage of the total payment you will be making.
As it relates to bills, try to find the best package from your service providers, particularly for telecommunication services: telephone, mobile, internet and cable. Many of the providers on island provide packages that will allow you to save money instead of paying for each service separately. Take advantage of unlimited fixed line calls packages. When it comes to your water bill, try not to leave the taps running. The longer your tap stays running the higher your bill will be. Last but not least for bills is electricity. Try your best to install energy saving bulbs at home. Do not leave energy pulling appliances on for long periods of time. A typical example is the iron. It is best to iron once a week rather than daily. If you are renting an apartment with a roommate, share the responsibilities equally. Sum up the total of the rent and bills monthly and divide it amongst yourselves. You will be amazed how much easier and fair this is.
On the topic of insurance and savings, try your best to save a percentage of your salary every month. This is to ensure that you have monies set aside for unforeseeable future events. Don’t just allow your money to sit in a bank collecting interest. There are quite a few international financial institutions on island where you can invest in bonds and other financial instruments. If you just want to save, find out information from all our banks and choose a savings plan that gives you the best value for your money. It is also wise to set up your own business or use your talents to make some extra cash. Medical insurance is also a nice way to manage your finances. How? Medical insurance allows you to make a monthly payment so that if you or the kids fall sick, you can get some of that money back. How cool is that! Life insurance is also a good investment. Many agencies offer life insurance with a savings plan. You can therefore get a large lump sum on retirement or annuities. It can also be an investment for your family so that when you are deceased they can have some form of finance to fall back on.
As it relates to transportation, it is wise to budget your monthly transport allowance ahead of time. Know how much you will need monthly and have a small purse or case to house those funds. Set aside this money into coins and everyday take exactly what you need. If you have a vehicle, let’s hope you would have been financially savvy and bought one that is fuel-efficient. Try to get a full tank monthly. If there are a number of you in a neighbourhood with vehicles, carpooling is the way to go.
Let’s talk food. We all love to eat. Many persons have the habit of buying breakfast and lunch daily. You are setting yourself up to be broke by doing so. Set aside how much money you will need for groceries on a monthly basis. Many persons like to shop weekly. This is okay as fresh produce has a short life span and needs to be replenished occasionally. Buy in bulk. Always be on the lookout for sales and specials from companies around the island. Cook as many meals as possible at home. It is healthier and you save much more than buying prepared food everyday. Another useful tip is to weigh the options at the supermarket. If there is a can of tuna fish for example for EC$2.00 with a net of 4oz and a can for EC$3.00 with 7oz, take the EC$3.00 can. This is almost double the amount of tuna for just 50% more! If you decide to buy two EC$3.00 cans (EC$6.00) you will have 14 oz of tuna whereas if you decide to buy three EC$2.00 cans you will only have 12oz of tuna.
All work and no play make Jack and Jane dull boys and girls. One should always set aside a sum of money for entertainment, monthly. After all, you must live life and make yourself happy at all times.
You can include clothes in your budget but avoid buying clothes too frequently. This can and will prove to be a ‘wallet killer’. Take advantage of sales when they arise and try your best not to go overboard. Ensure however, that it does not take priority over your rent, bills and food. You can include it as part of your entertainment budget.
Let’s not forget those with kids. Every summer parents are faced with the difficulty of coming up with the finances to support the cost of books, uniforms, shoes etc. To alleviate this lump sum cost before the school year, every month during the year set aside a small sum of money in a bank account especially for the kids. Some local banks on island provide savings plans that pay interest monthly. Take advantage of this and you will be amazed that by the time summer comes you will have just enough to cover the expenses.
In conclusion, managing your finances does not have to be overwhelming. Plan ahead and save for unforeseen circumstances. Keep your eyes and ears open for sales and specials and ensure that you give everything priority. Spend and use your money wisely on things that you need and not what you want. Don’t let your wants take priority over your needs. You will be surprised how less of a headache you will have if you follow these helpful hints.
