Personal Finances 101 Textbook: None. Course will be based on online essays and materials. Instructor: Mba Mbulu

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Class #6

Steps Toward Personal Financial Triumph

Keys to Successfully Managing a Budget

Minor considerations often spell the difference between victory and defeat, or owing money instead of owning it. Following are three small factors that can be easily overlooked. Don't overlook them!!

Review is a constant in this course. Always check your notes from earlier classes. It will enable you to blend in everything more easily.

(1) Recognize the difference between necessities and non-necessities. What is a necessity? A necessity is anything that can cause serious harm if it is lacking. Food is a necessity. Shelter is a necessity. Clothing is a necessity. On the other hand, an abundance of food is not a necessity. More than adequate shelter is not a necessity. More than adequate clothing is not a necessity.
The trick is to determine what the difference is between adequate food and an abundance of food, adequate shelter and lavish shelter, adequate clothing and excessive clothing. You, as the person who is in charge of your dollar, must determine the boundaries and make decisions that are consistent with those boundaries.
What is a non-necessity? A non-necessity is anything that can be done without. As the person who is in charge of your dollar, must determine which items can be done without and determine how much of your budget to spend on such items. I will make an unscientific guess: at least 25% of the purchases made in the United States go toward non-necessities and abundances. The likelihood is that you can cut your spending appreciably and not see a noticeable decrease in your standard of living. If you are experiencing financial difficulties, and most Black People are, you should eliminate some of the non-necessities.

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(2) Don't fall victim to your impulse to buy. Impulse buying is a budget wrecker. But worse than that, most impulse buying is on purchases that you could very easily do without. I would argue that impulse buying is a waste of resources 99% of the time. Marketers and business people know that. They also know that much of their profit would be lost if people did not engage in impulse buying. That is why they set up situations and conditions that encourage you to buy impulsively. As I stated in an earlier lesson, only buy what you have planned to buy, what you have put serious thought into buying. That way, your budget will not get overextended.


(3) Don't fall victim to your family members impulses to buy. This especially applies to children. Most parents have a weakness for their children's desires. You have to learn to treat their desires as you would every body else's desires. Plan purchases for them within the context of the overall budget. What they think the "absolutely have to have" is a product of their impulse responses. Marketers and businesses direct ad campaigns at childrens' impulses and parents' reluctance to say no to their children. Don't allow business people to use your children against you, and don't let your childrens' impulses outweigh your carefully considered decisions.
Remember: Your children will make it just fine without most of those "must have" items. Additionally, it is good to use opportunities like that to teach them that they should not expect to get everything they want in life. They must learn to purchase selectively and wisely. Unlike on tv, the better things in life are not easily or quickly acquired. If your children see you make careful, selective purchases, they will be more likely to make careful, selective purchases when they have money to manage.

Questions? Email aset@asetbooks.com and list your course title as the subject.

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