Advice from the top: Fail to plan, plan to fail

Everyone should enjoy life, it is precious! Do not waste it by poorly managing your finances and spending valuable time worrying about debt. Here are some guidelines on financial management:

Set a budget and be disciplined about adhering to it. Be strong and put temptation behind you when you see things you want but cannot afford.

Set aside the amount of money you spend each week on essentials such as rent and utilities. Provide for everyday outgoings such as transport or running a vehicle.

Allocate finances for luxuries that you enjoy or medical support you may need. Above all, save for things like children's education and retirement.

Speak to a financial adviser who can provide you with a financial health check and advise you on the most efficient way you can plan and save to achieve your personal goals.

The earlier you start saving for these kinds of things, the easier it will be to manage your finances in the longer run. Starting to save towards retirement at 45 to retire at 60 can be expensive.

If you want something outside your forecasted expenses, save towards it by putting a little money aside each week. In this way, you will not have to take out a loan and pay interest making what you wanted even more expensive.

Saving and living within your income is essential and this will enable you to enjoy your life and not spend it in the depths of despair worrying how you are going to pay your creditors.
Be disciplined

We enjoy the shops that have special sales. You often hear people say “I didn't really need to buy it, but there was so much off the original price in the sale I couldn't resist the bargain.''

If you don't need it, it is not a bargain. You can pick up some great discounts in the sales but be disciplined and only buy the items you really need otherwise you will be wasting your money.

Another item you can easily overspend on is a holiday. Save towards your holiday and stay within your budget. The temptation to spend that little bit more on a holiday can leave you short of money or even in debt when the holiday becomes a distant memory.

Overspending can leave you seriously in debt. Most people in debt worry and get stressed. Next time you go to spend a little more than planned, think, do you really want the worry?

If you are in debt already please speak to a financial adviser. Allow them to guide you to manage your debt. If you have more than one creditor, a financial adviser could advise you on how to narrow down your debts to one creditor which can reduce the interest you are paying.

Review avenues where you can cut down on expenses. For example if you go out twice a week, go out once. Cutting out an unnecessary journey can save money which can go towards paying off your debt.

The worse thing that you can do is to put your head in the sand and hope all your financial problems will go away.

How to draw up a budget

The sample budget shown on the right has two categories, which are income and expenses.

Income includes money earned, including wages and any interest paid from investments. Expenses are the items on which you spend your money.

The sample has three columns, the first column is the estimated amount that has been budgeted, the second column is the actual amount spent and the third column is the balance or difference between the two.

Five savings vehicles

Single premium life policy. This allows you to pay a single lump sum that will be saved for an agreed period.

Regular savings plan. This is a fixed amount saved monthly for a specific period to achieve a financial objective such as provision for retirement, a child's education or future wedding.

National Bonds for regular profit. It also offers you a chance to win Dh1 million in a prize draw.

Takaful savings plan (an Islamic insurance scheme).

Savings account at a bank. A savings account at the bank which provides easy access to savings.

The writer is Business Services Manager for the Nexus Group of Companies.