Home Budget Management and Importance of Saving 6/8/2020 There are many challenges which our entire society is currently facing due to COVID-19 pandemic and those challenges have imposed need to do some usual activities differently, to understand and adapt to specific situations and information, to use knowledge to keep us and other safe, but also to continue to be productive, responsible and useful members of the community. By utilizing online communication channels, the Central Bank of Bosnia and Herzegovina continue with the financial education of citizens, which is why we have prepared several informative – educational articles, filled with, what we believe, are interesting, current and useful information and pieces of advice. We hope that soon we will be able to get back together implementing activities “live”, in the process of learning and promoting the importance of financial literacy and financial inclusion in Bosnia and Herzegovina. What is personal budget management? Home budgeting, planning, setting long-term and/or short-term financial goals, and responsible approach to money are all indicators that an individual takes a responsible approach to managing their personal finances. The unpredictability of events and circumstances is common in life and usually manifests itself through different dynamics in income and expenditure, health and employment. All this often prevents us from implementing our ideas and plans partially or completely, and it is this unpredictability which obliges us to have a responsible approach towards money, to revise and improve useful habits, and thus to overcome potential financial difficulties. Savings, in short, are about keeping money or other tangible goods. Saving is a useful financial habit best illustrated by many examples from the daily life of each of us when the amount saved helped solve a new problem or make a necessary purchase. Savings should also be seen as a possible precondition for investing money, and not just as mere storage. When saving, we generally feel more secure, more protected from unforeseen circumstances, and even more prepared to view money as a means of investment and an opportunity to further improve our financial position. However, it is not always easy to save, because there are certain predispositions for saving. Without adequate income, it is difficult to control expenditures and thus save, but it is important to emphasize that, in addition to income, discipline, systematic and responsible access to one's own finances are key to acquiring and maintaining a savings habit. Tips for better managing your personal finances Income and expense management requires discipline and control, monitoring and analysis, and only if we continually adhere to the principles outlined can this useful skill produce positive results. Keeping a home budget should be understood as a skill that can be learned and improved. We recommend you to try the following steps: Keep a record of your home budget, make projections, and adjust your earnings and spending according to your budget. It is best to try to do a summary at the end of each month and see how much we have completed or deviated from the planned budget; Define short-term and long-term goals for savings amounts and monitor their realization. Accurately track expenses, eliminate unnecessary expenses that you notice, and in this way free up an amount for saving; You can also find additional motivation for saving by setting a savings goal (purchasing something, solving a problem, investing etc.) Be disciplined and persistent in recording and separating available amounts whenever possible. This way, you not only achieve your goal but also improve your habits and skills, which certainly contributes to better self-confidence; Consider increasing income, looking for additional jobs, providing services or utilizing existing assets in a more practical way; Consider using a financial product offered by commercial financial institutions on the market. It is useful to have information about the types and characteristics of savings, the amount of interest, the dynamics of payments, types of currency and so on. More information about types of savings can be found on our web site at https://www.cbbh.ba/press/education/762?lang=en In modern life, we are often faced with the obligation to be as financially involved as possible, that is, to use certain financial products and services. We are often obliged to make various payments, including fees, and it is useful to consider the possibility of saving money as well as time by using modern technologies in accessing financial services; If you are already using a financial product or service, and are in the situation of expecting or experiencing a reduction in income or additional expenses, try explaining the new situation to the financial institution you are working with, and learn about options for debt restructuring, moratoriums, or other possible ways to mitigate the effects of the new financial situation; Try to inform yourself about economic trends, seek to gather information from professional sources; The redistribution of money within the home budget or savings also enables various investments, whether in real estate, business, crafts, education, health, and it is useful to further educate and inform ourselves about business trends in the environment, in order to improve our financial position through responsible and informed investment. It is clear from the above mentioned that responsible management of personal finances is not always an easy task, but it is necessary to constantly try to improve our financial habits, because not all the usefulness of this habit and the possible savings can be neglected, especially given unforeseen circumstances with which we can be confronted. These activities were implemented within the project Promotion of Financial Education and Inclusion implemented by the CBBH with the support of the European Fund for Southeast Europe - Development Facility (EFSE DF).
