With Christmas now behind Jamaicans, better financial management is one of the resolutions that many have made for 2018 to improve their financial status.
However, managing one’s financial affairs must start with the most basic financial tool – a budget – maintains Rose Miller, grants manager at the JN Foundation, who also leads the organisation’s financial empowerment programme.
Creating a budget, in itself, is also a process, she advises; therefore, crafting one must be a thoughtful exercise. She recommends the following:
Understand Your Finances
“Identify all the sources from which you earn your income. Many persons believe that their salary is their only source of income, although they also have passive income.”
Miller says that all wages, dividends, rental income, remittances, interest payments, and other earnings received are regarded as income and should be treated as such.
Keeping track of one’s money is also critical to understanding one’s finances she says.
“Everyone should maintain a record of all the money they receive and spend over a given period,” Miller underscores, “as it helps to determine the total sum received during a given period, not only from salary; but, also from other sources of income they may receive.”
She says this is especially important during the initial stages of creating one’s budget, as it will confirm exactly how much one is earning; and how much is being spent and on what.
In order to properly track spending, storing receipts relating to purchases is important, she says.
“Keeping your receipts help you to track all of your purchases and payments including: utility bills, grocery receipts, credit card and other loan payments. That process allows you to have a clear idea of all the expenses you cover over a particular period; and highlights any outstanding payments you may have,” she explains.
She notes that people may choose to store the physical receipts or scan and store them digitally.