Hello Community and friends 😇❤️!
Life could only get better if we spend according to how we earn. This is a clear issue when we are faced with what we actually need to survive or sustain, and the wants which are desires.
The first thing that comes to mind when we are faced with budgeting, which helps us to analyze how to plan properly on how to achieve and channel our funds is “What Are Our Basic Needs?”
Since I know what my income is at the end of the month, I don’t budget beyond this earning. Most importantly as I have a family and a mother, I basically consider the basic needs which comes first before considering wants.
SCALE OF PREFERENCE:
Referencing this to the Law of Economics which is dated ages ago, the “Scale of Preference” helps us to state in a list of a kind of downwards slop of how our needs are with priorities. This scale shows how some needs are more important than others, therefore helping us to choose the ones that will come first. “The scale of preference” has helped me for many years in budgeting and managing my finances and achieving results.
HOW DOES THIS WORK:
If I don’t prioritize, I will run into financial problems so I make sure to solve first the basic needs before I can think of other things outside the needs. What I do at the end of every month is first to remove my savings, remove part of my girls school fees to save up, then purchase every food stuff in bulk especially the ones that will not spoil and others that can be refrigerated. The rice 🍚, semolina, beans, tomatoes 🍅, pepper 🌶, oil, condiments, provisions and toiletries. Its so easy this way because I found out that buying in bulk saves money 💰.
When we buy in bulk, we are definitely saving some cost from going to buy in little because bulk buying is usually at wholesale prices. Although for those who are single, they may believe in spending little by little but bulk buying is the goal.
However, I budget monthly data, electricity every two weeks, then miscellaneous for emergencies. Once this is done , then I can think of extending my expenses to wants. These always come after the basic needs are sorted out because wants are numerous but can wait until we can afford them.
In conclusion, “The opportunity Cost 💲” are those items we could not buy and services we could not afford because of the ones we solved. And this is indeed the way to go about with our finances. I believe that if I needed to buy a shoe 👠 at the end of the month, I will definitely check if my income will be enough for the basic needs and the shoe 👠 which is a want. Prioritizing when it comes to budgeting considering our income is the most to achieving a healthy financial balance.
This is response to Hive Learners Prompt:
“FINANCIAL LITERACY” Wk- 116 E 01.
Thanks for reading .
All sourced photos has been credited.
