The Role Of Budget Plan & Practices in Subsistent Life Of Families in Nigeria

In Nigeria, the family is extremely important. The Nigerian families are not the epitome of indestructible knit, but there is still that strong family bond which is mostly described by the saying that blood is thicker than water ; and fuelled by strong traditional norms.

Marriage which is a means by which a family is formed is viewed as a necessary but not sufficient condition to create a family. The ability of families to meet their most basic needs is an important measure of economic stability and well-being.

While poverty thresholds are used to evaluate the extent of serious economic deprivation in our society, family budgets that is, the income a family needs to secure safe and decent-yet-modest living standards in the community in which it resides offer a broader measure of economic welfare.

A budget is a plan to manage money effectively by keeping track of income and expenses. A family budget can be simple or detailed, depending on the needs. Family budget can be based on primary source of income which is wages from an individual’s main job or and investment income which is additional income from business or investment.

There can be short-term and longterm family budget. The practice of family budgets and budget standards dates back to the 19th century. Budgets practice in the family has been used to develop cost of living estimates, to assess wage proportions, and to examine the standard of living.

This post shows the budget patterns, economic benefits and practices in families and the role budget plan and practices play in ensuring subsistent life of families. The study specifically explored the significance of budgeting in effective family management in older families.

Managing a budget and keeping records is tedious enough, so try  to avoid “watching every penny” and being distracted with irrelevant details. A good effort at keeping records and managing your family budget will go a long way toward enhancing your financial future. With that being said, the budget plan is very essential for subsistence livelihood of families as well and effective economic management.

In tough economic times, many families lose their jobs, homes, cars, retirement accounts, belongings, savings, and more. Families often struggle just to meet their basic needs. Unemployed fathers feel like failure, and are ashamed of losing their identity as the family’s provider.

The shift from having “something” to having “nothing” can have devastating and drastic impact on families as a whole; on marriages, and on husbands, wives, parents and children.

Most family financial problems are not something that happens overnight. It is generally caused by something that is impacting the amount of money coming into the home. And how and why spent. So knowing how to prevent financial downfall, economic distress and its devastating effects on families will help regain financial power and peace of mind.

As such family budget practice may serve as precautionary measure against financial stress. Budget helps to be practical with spending and set limits.

According to Oyedokun Titilope, budget is not an habitual practice among families and she added saying that budgeting is easier for older parents because they are so focused on the long term instead of the short term. Well, she advice that a budget should have a purpose or defined goal that is achieved within a realistic time – frame.

The more complicated the budget is, the less likely a person is to keep up with it. Family budgeting should be designed to be flexible and be reviewed from time to time. Special precautions need to be taken by families to adhere to their budget plans.

Clearly, families will now have to estimate their average yearly income which is relatively constant and base their budget plans on about 75% of annual income. “Husband and wife have a solemn responsibility to love and care for each other and for their children. ‘Children are heritage of the Lord.

Budget Pattern and Practices in Families

Most families do not have any financial education and assume they know how to manage their finances. The determining factor for budgeting in the family is to determine what are luxuries and necessities for the family. A prudent budget approach should allow for marginal error and the estimation is based 5% or 10% below the estimated income.

When done correctly, households should end any given year with about 5% of their income left over.

In general, households that start out with expenses that are 5% or 10% below their average income will slowly develop a habit for savings that can be accessed when earnings are low. Aggressive budgets are generally high on savings. Savings in an ideal world should be about 30% of your pay-check. In the real world, savings is about 10%.

Family needs are divided into primary and secondary needs. Primary needs are the very important needs for good health and survival {clothing, shelter and healthcare} which the family cannot do without and secondary needs are desirable but the family can do without. People need to know that each family has diverse needs and wants deriving from its unique financial background.

Other factors which control budget are family size, family values, and season of the year, locality, and inflation.

Family budget plan should be continuously reviewed once or twice a year. If you come up short, go back to your projected monthly expenses and see what you can get rid of. Look first to your non-essential expenses which can be removed altogether for a while { e.g eating out}. Keep going through the list, making adjustments until your total expenses are less than your income. It is also important for family spending to be tracked regularly, take add up your actual spending and compare it with what you planned.

Budgeting & Family Subsistence Living

We all know that subsistence has been defined as having the very basic necessities of life. Every family irrespective of social, political and economic strata should be entitled to the very basic need of life. Although this is not always the situation especially in developing countries due to poor governance and high rate of unemployment. It is therefore pertinent that families to imbibe and budget plan to safeguard a minimum standard of living.

According to Citro and Michael, ISI model set a base level for a “reasonable standard of living” and “reasonable living” to include food for a nutritionally balanced diet, clothing, personal care, health, education, transport, household energy, childcare, insurance and modest allowances for savings and contingencies.

Budgeting & Economic Management in the Family

Family budget helps to stop unnecessary spending, open doors to financial security, helps you keep the money you earn, make you become debt free, how your money will work for you and bring in extra money. Budget helps family to organize and control their financial resources, set and realize goals, and ensures it is a practical way to meet your financial needs.

It will give your family an overall picture of where your money is coming from, when it is coming in, and how you are spending the money you earn. Because without a spending plan it is difficult, if not impossible, to use the money in an efficient and strategic manner.

A budget will almost certainly produce extra money for family to do as you wish. Unnecessary expenditures, once identified, can be stripped out. Savings, no matter how small, can be accumulated and made to work for family.

Wrapping Up

The data and statistics shows that family who budget, give highest priority to children’s education and family basic needs are at the peak of family budget plan. Most of the families who practice budget and their spouses have post-graduate qualification. This may be attributed to couple’s income power as a result of their education or that their level of education has impacted on the need to budget for the family.

It is alarming to discover that only 9.4% of families budget for their health, despite the fact that they are highly educated. We can make inference from this post that data that most families in Nigeria, whether educated or not are living at the subsistence level. Family have very little luxury and ability to make retirement budget hardly afford itself.

Still, it is however surprising to discover that once older couples get in marriage, the less they tend to indulge in family budget. Are they self actualized? This could be  another question to find answers to another day.

Conclusion

Working with family living budgets can be interesting and very rewarding if you perceive it as a challenge, and recognize the personal economic benefits achieved from a successful budget. Budget is not a one-time event, but rather an on-going exercise in pursuit of your financial goals. To accomplish the goals you have set, you should monitor your actual expenditures and compare them to your budget once or twice monthly, if not more.

However, the most difficult part of managing a family budget is having the discipline to do it. Managing a budget and keeping records is tedious enough, so try to avoid “watching every penny” and being distracted with irrelevant details. A good effort at keeping records and managing your family budget will go a long way toward enhancing your financial future.

Budget plan is very essential for subsistence livelihood of families as well and effective economic management.