Archive for category: Budgets

How to Create a Budget for Long-Term Financing

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Creating a budget for long-term financing can feel overwhelming, but it doesn’t have to be. Think of your budget as a roadmap; it guides your financial journey and helps you reach your goals without unnecessary detours. Whether you’re saving for a major purchase, like a home or a car, or planning for retirement, a solid budget lets you allocate your resources wisely and avoid surprises that can upset your plans.

In today’s financial world, it’s important to know where your money goes and how to manage it well. A budget helps you see your income and expenses, understand your spending habits, and find areas where you can save. With some planning and commitment, you can create a budget that will benefit you in the long run.

Let’s look at how to create the perfect budget for your long-term financial goals.

Understanding Your Income

Start by figuring out your total income. This includes not only your regular paycheque but also any extra money you earn, such as freelance work, rental income, or dividends from investments. Knowing your total income gives you a clear view of your finances.

Next, break it down monthly. This step is crucial for matching your income to your budgeting periods. For example, if you earn rent from a property, consider seasonal changes and potential fluctuations to avoid overestimating your budget. Understanding your income helps you make better financial decisions in the future.

Benefits of Credit Unions

Credit unions offer helpful features for your finances. Unlike traditional banks, credit unions are owned by their members. This often means they have lower fees, better loan rates, and great customer service.

By joining a credit union, you can access various financial products that support your long-term goals. Lower rates on loans for major life events or better savings account options that help your money grow. With personalized service, credit unions take the time to understand your financial situation, providing tailored advice as you manage your budget.

Tracking Expenses

The next important step is tracking your expenses. List all your fixed costs, such as rent or mortgage payments, utilities, and insurance. Fixed expenses are predictable and don’t change much from month to month. Then, look at variable expenses like groceries, dining out, or entertainment. These can be harder to control but are essential to include.

Using a budgeting app or spreadsheet can make this process easier by helping you categorize and manage your expenses. You will see where your money goes each month and can adjust as needed. By monitoring your spending patterns, you can identify which expenses are necessary and which can be reduced.

Setting Goals

Once you understand your income and expenses, start setting your financial goals. Consider what you want to achieve in the short term and in the long term, such as retirement or buying a new home.

Rank these goals based on your situation. Pay off high-interest debt first before saving for a down payment. Allocate funds in your budget to work towards your goals step by step. Reaching milestones, whether big or small, strengthens your financial discipline and keeps you motivated.

Building Flexibility

While it’s important to stick to your budget, flexibility is essential as well. Life can be unpredictable, and your financial situation can change due to events like job loss, unexpected costs, or even a sudden windfall. Your budget should be a living document that adapts to these changes.

Include a buffer in your budget for unexpected expenses. This buffer can help during emergencies, like car repairs or medical bills. Having an emergency fund can also reduce stress and help you manage unforeseen events without disrupting your financial goals.

Reviewing Your Budget Regularly

Drafting your budget is just the beginning. It’s important to review it regularly. Take time each month to check your budget and see how your spending aligns with your plan. Adjust your budget as needed to reflect changes in income or spending priorities.

Make budget reviews a routine part of your financial management. This habit keeps you on track with your goals and lets you celebrate your achievements. Each review is a chance to refine your approach, helping you build financial confidence over time.

Staying Committed to Your Budget

Budgeting requires both discipline and planning. Sticking to your budget takes ongoing effort and adjustments based on your lifestyle and financial goals. Keep yourself motivated by tracking your progress and reminding yourself of the benefits of following your budget.

As you get used to budgeting, it will likely become easier and more natural. What used to feel like a chore can turn into a positive practice that gives you clarity and control over your finances.

Successful long-term financing budgeting is achievable. By understanding your income, tracking your expenses, setting clear goals, staying flexible, leveraging the benefits of credit unions, and regularly reviewing your plan, you can achieve your financial goals. As you start this budgeting journey, keep it engaging and rewarding, empowering yourself at each step.

7 Tips for Bulk-Buying to Maximize Your Budget and Minimize Wastage

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As the cost of living continues to rise, the grocery bill has become a significant household expense that can strain many budgets. Unlike discretionary spending, food is a necessity, making it a persistent cost that people cannot avoid. Inflation and fluctuating prices can also make it challenging for the average family to keep grocery expenses in check.

Bulk-buying has long been a go-to solution for cutting down grocery costs, and it can indeed be highly effective provided that you do it strategically. That said, you can’t stop at simply buying some items in larger quantities; you also need to make sure that what you buy offers good value and that it won’t go to waste. Approach bulk-buying with careful planning and you can guarantee that you get the most out of your spending while also minimizing food spoilage.

Follow these practical tips to make the most of your next bulk buys at the supermarket:

Take Advantage of Sales and Special Deals

Strategic timing is everything when it comes to bulk-buying. Finding a good deal on something you already use frequently can be a smart way to stretch your budget even further. For instance, retailers often run promotions or offer discounts on a variety of products; these moments are ideal for making large purchases. Keep an eye on circulars, apps, and loyalty programs to know when such deals are happening, and be ready to buy in larger quantities when the price is right. When you align your bulk-buying with sales, it’s much easier to secure the best value for the money you spend.

If you’re a frequent shopper at Landers Superstore, the Maya Landers Cashback Everywhere credit card is an ideal ally for maximizing your grocery budget. This card rewards almost every purchase you make, and buying from Landers can reward you with up to 5% cashback. In addition, the card also functions as your Landers membership card and thus grants you access to special in-store discounts, the latest promos, exclusive deals, and other perks. Stay on the lookout for Landers credit card promo offers and you’ll find no shortage of chances to save.

Focus on Non-Perishables

When choosing what to buy in bulk, think about the shelf life of the items. Some of the best candidates for bulk-buying are those that won’t spoil for months, if not years. Grains, canned goods, pasta, and other pantry staples can all be stored for long periods without losing their quality. This helps you avoid waste and ensures you have essential ingredients on hand whenever you need them. Plus, stocking up on these items makes your overall shopping process more efficient, as doing so means you’ll have to take fewer trips to the store.

Check Unit Prices

It’s easy to assume that buying a larger package equates to larger savings, but that’s not always the case. The key to making sure you’re getting a good deal lies in the unit price, which tells you the cost per ounce, pound, or other measurement. You can often find this information on the store shelf or packaging. If it’s not available, you can calculate it yourself to determine if bulk-buying really offers the savings you’re expecting. Don’t skip out on comparing unit prices before you check out, as this is one of the best ways to make sure that you’re actually saving money with each purchase.

Only Bulk-Buy What You Use

The temptation to stock up on every discounted product can lead to waste if you’re not careful. Just because something is available in bulk doesn’t mean it’s a good fit for your household. Focus on items you know you’ll use regularly, and skip the things you rarely reach for. Buying what you don’t need or can’t consume in time only leads to spoiled food and wasted money.

Invest in Effective Storage Solutions

Maximizing the benefits of bulk buying isn’t just about the purchase—it’s also about how you store those goods afterward. Improper storage can lead to spoiled food or even pest problems that will rapidly undermine any savings you might have gained. Invest in airtight containers, a well-organized pantry, and an efficient freezer to extend the life of bulk purchases. With the right storage solutions, you can keep items fresher for longer, reduce waste, and help your bulk-buying efforts pay off in the long run.

Plan Meals around What You Buy

After you’ve made your bulk purchases, the next step is integrating those items into your meal planning. This way, nothing sits unused for too long. In addition to reducing waste, planning meals based on what you already have also makes grocery shopping easier because you can then focus on complementary items you may need. This kind of forward-thinking approach turns bulk-buying into a more efficient system that saves both time and money.

Use a First-In, First-Out System

Organization plays a critical role in making bulk buying effective, especially when dealing with items that have expiration dates. The first-in, first-out or FIFO method ensures that you use up older products before newer ones. Place newly purchased items behind the ones you’ve already stored to avoid accidental spoilage. FIFO is a simple yet effective system that enables you to rotate through your stock efficiently and reduces the risk of waste.

Bulk-buying groceries can be an excellent way to save both time and money, but it requires thoughtful planning and organization. Focus on what you truly need and store your purchases properly to fully unlock the potential of your bulk buys. In the long run, a smart approach to bulk-buying can help you take control of your grocery expenses and make them work in your favor.

 

Review of Guyana Budget 2023

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The Senior Minister in the Office of the President, Honourable Dr. Ashni Singh, presented the 2023
Budget on 16 January 2023. This is the fourth budget presented by the current PPP / Civic administration led by H.E. Dr. Irfan Ali.

Budget 2023 was presented under theme “Improving Lives Today, Building Prosperity for Tomorrow”. It projects total expenditure of G$782 billion (US$3.75 billion) while total revenue is estimated at G$690
billion (US$3.31 billion).

The budget deficit for 2023 is estimated at G$92 billion (US$441 million).

Performance of National Economy in 2022

Budget 2022 had projected that the national economy would have grown 47.5 percent in 2022, with the non-oil sectors and oil sector expected to grow by 7.7 percent and 96.7 percent, respectively. Actual growth for 2022 was 62.3 percent, with the non-oil sectors growing by 11.5 percent, making Guyana the fastest growing economy in 2022.

National Output and Inflation

The gross domestic product at current prices was US$14.371 billion in 2022 compared to US$7.435 billion in 2021, while per capita GDP in 2022 was estimated at US$19,253 compared to US$10,302 in 2021.

The contributions to gross domestic product of the major sectors, as measured at 2012 prices, are shown in the table below.

Source – Budget Speeches 2023, 2022, 2021

Source – Budget Speeches 2023, 2022, 2021

The petroleum sector continued to expand during 2022, producing 101.4 million barrels of oil in 2022 compared to 42.7 million barrels in 2021. In 2022, a second FPSO – Liza Unity – commenced production, joining the Liza Destiny in the Stabroek Offshore Block operated by ExxonMobil and jointly held with Hess Corporation and China National Offshore Oil Corporation. Guyana’s estimated proven oil reserves stands at over 11 billion oil equivalent barrels.

The gold sector contracted by 2.5 percent due to challenges faced by small and medium scale producers, with an annual declaration of 486,415 ounces in 2022. The sand extraction and stone production sectors grew by 35.6 percent and 18.6 percent, respectively, reflective of increased construction activity in both the public and private sectors. The construction sector is estimated to have grown by 26.3 percent in 2022.

The agriculture, fishing and forestry sector is estimated to have grown by 11.9 percent in 2022 as most industries recovered from the 2021 floods. Increased production was recorded in the rice, livestock, other crops and forestry sectors while outputs from the sugar and fishing sectors were lower in 2022.

Inflation in 2022 was 7.2 percent, compared to 5.7 percent in 2021.

Balance of Payments

The balance of payments recorded a surplus of US$128.3 million in 2022 compared to a surplus of US$130.2 million for 2021. The main contributors are highlighted below.

Source – Budget Speeches 2023, 2022, 2021

Source – Budget Speeches 2023, 2022, 2021

The current account benefitted from increased earnings from crude oil sales in 2022 with production increasing with a second FPSO. Declines in earnings from gold and rice exports were recorded in 2022, offset by increased earnings from bauxite and other exports. Imports of fuel and lubricants increased on account of higher global oil prices. However, other imports of goods declined in 2022 as compared to 2021 when the second FPSO was brought into Guyana. There was a marked increase in the net imports of services growing by 49.7 percent, or US$1.5 billion, in 2022 over 2021.

The capital account of the balance of payments ended with a deficit of US$4,120.1 million due to lower foreign direct investment in 2022, as well as the 2021 figures reflecting the investment in the second FPSO.

The balance of payments surplus resulted in an increase in net international reserves at the Bank of Guyana to US$939.2 million as of 31 December 2022, equivalent to 1.2 months of import cover, compared to US$810.8 million at the prior year end.

Public and Guaranteed Debt

Total public and publicly guaranteed debt amounted to US$3.6 billion at the end of 2022 with external debt and domestic debt amounting to US$1.6 billion and US$2.0 billion, respectively, compared to US$1.4 billion and US$1.7 billion at the end of 2021. The largest external debt lender is the Inter-American Development Bank with US$787 million outstanding at the end of 2022. Domestic debt comprises treasury bills of US$1.1 billion and debentures issued by the Bank of Guyana for US$935 million to securitise Government overdraft positions coming forward. The debt (including guaranteed debt) to GDP ratio at 2022 year-end was 24.6 percent compared to 38.9 percent at the end of the prior year. The increased GDP in 2022 had a tempering impact on the debt to GDP ratio.

Natural Resources Fund

The Natural Resources Fund amounted to US$1.272 billion at the end of 2022, compared to US$607.6 million at the end of 2021. Inflows to the NRF during 2022 comprised of US$1.1 billion being Guyana’s share of profit oil and US$155 million from royalties, in addition to interest of US$17.5 million. An amount of US$607.6 million was transferred from the NRF during 2022 to the Consolidated Fund.

Budget Revenue Projections for 2023

Of the total projected revenue for 2023 of G$690 billion (US$3.31 billion) in Budget 2023, G$578 billion (US$2.775 billion) is from current sources while G$111 billion (US$534 million) is from capital sources.

The major sources of current revenue of G$578 billion are summarised in the table below.

Source – Budget Estimates 2023, 2022, 2021

Source – Budget Estimates 2023, 2022, 2021

The current revenue for 2023 includes a withdrawal from the Natural Resource Fund of G$208.9 billion (US$1 billion). It also reflects Carbon Credit Inflows of G$31.3 billion (US$150 million). During 2022, almost 33.5 million carbon credits were issued to Guyana for the period 2016 to 2020 by the Architecture for REDD+ Transactions Environmental Excellence Standard (ART-TREES) Secretariat. Hess Corporation became the first buyer of Guyana’s carbon credits, with a purchase of approximately one third of Guyana’s carbon credits issued by ART-TREES.

Tax revenue is projected to grow as economic activity expands in 2023. No new taxes were introduced in Budget 2023. However, certain fiscal measures were introduced or extended in Budget 2023, some of which are highlighted below.

I. Excise tax, Import Duty and VAT

  • Continued application of zero percent excise tax on fuel.
  • Continued application of the freight cost adjustment which utilises pre-pandemic freight values in the determination of CIF values for tax and duty purposes, up to 31 December 2023.
  • Removal of VAT on new electric vehicles (not hybrid) of any power rating (new defined as less than four years old).
  • Reduction of excise tax from 45% to 35% on new motor vehicles below 1500cc (new defined as less than four years old).
  • Introduction of flat rate of excise tax at G$800,000 on used motor vehicles below 1500 cc (used defined as four years or older).
  • Removal of VAT on the sale of residential property

II. Income Tax and Corporation Tax

  • Increase in monthly income tax threshold from G$75,000 to G$85,000
  • Increase in the capital allowance applicable to electric motor vehicles to 50 percent annually

III. Public Assistance and Support

  • Increase in “Because We Care” grants from G$25,000 to G$35,000 per child
  • Increase in Old Age Pension from G$28,000 to G$33,000
  • Increase in Public Assistance from G$14,000 to G$16,000
  • An allocation of G$5 billion to meet other cost of living interventions to be determined

IV. Other

a. Increase in low-income mortgage ceiling on loans obtained through the banking system from G$15 million to G$20 million Capital revenue of G$111 billion is expected to be received principally through external loans of G$101 billion (US$487 million) and external grants of G$10 billion (US$47 million). The Inter-American Development Bank is expected to provide loans amounting to G$17.9 billion (US$86 million). Other significant loans are expected in 2023 from the People’s Republic of China – G$20.5 billion (US$98 million) and the United States of America – G$30 billion (US$144 million).

Budget Expenditure Projections for 2023

Budget 2023 projects total expenditure of G$782 billion (US$3.750 billion) compared to G$553 million (US$2.652 billion) in 2022. The table below analyses the allocation of total expenditure across responsible agencies, with comparative allocations from 2022 and 2021.

Source – Budget Estimates 2023, 2022, 2021

Source – Budget Estimates 2023, 2022, 2021

Some of the policy and expenditure priorities highlighted in the Budget 2023 Presentation are listed below.

  • Construction of a 300-megawatt gas power plant and integrated natural gas liquids plant, as part of the Gas to Energy Project which will utilise the estimated 17 trillion standard cubic feet of recoverable natural gas reserves from offshore oil activities. Budget 2023 provides G$43.3 billion (US$208 million) for ongoing works on the Project.
  • Allocation of G$54.5 billion (US$261 million) for works in new and existing housing areas, including construction of roads, drains and bridges and installation of utilities, along with an allocation of G$13.0billion (US$62 million) for interventions to improve water quality.
  • Construction of the New Demerara River Bridge which will be a high-span, four-lane permanent concrete and cable-stayed structure. Budget 2023 provides G$5 billion (US$25 million) for ongoing works on the new bridge.

Allocations for the following major transport links:

  • Palmyra to Crabwood Creek Highway – G$27.7 billion (US$139 million).
  • ECD Railway Embankment Road to Orange Nassau including new Hope Canal bridge – G$16.6billion (US$80 million).
  • East Coast to East Bank Road Link from Ogle to Eccles – G$10.3 billion (US$49 million).
  • Linden to Mabura Hill Road – G$11.9 billion (US$57 million).
  • Soesdyke to Linden Highway Rehabilitation – G$5.0 billion (US$24 million).
  • Commencement of construction of a paediatric and maternal hospital along with six regional hospitals with a budgetary allocation of G$13.1 billion (US$63 million).
  • Improvements to educational infrastructure with a budgetary allocation of G$12.4 billion (US$59 million) Projected Performance of National Economy in 2023.

National Economy Growth Projections

It is projected that the national economy will grow by 25.1 percent in 2023, with the non-oil sector expected to grow by 7.9 percent.

The petroleum sector is expected to increase production to 374,000 bpd, leading to growth of 35.6 percent in 2023. Key sectors of gold, bauxite and rice are expected to grow in 2023, along with sand and stone sectors in support of ongoing construction activities. In addition to Government’s public sector investment programme, several significant private sector developments of onshore support structures and hotels, are underway.

The balance of payments position is expected to record a surplus of US$150 million with higher export earnings maintaining the current account in surplus and a lower deficit on the capital account. Crude oil exports are expected to increase by 13.6 percent to US$11.3 billion. The increased export earnings will be offset by higher import spending, as Guyana’s third FPSO – Prosperity – is expected to arrive in 2023.

Inflation is projected at 3.8 percent, reflecting expectations of continued import price pressure, compared to 7.2 percent in 2022.

Khalil Alli, Partner at Jack A. Alli, Sons & Co.

Khalil Alli, Partner at Jack A. Alli, Sons & Co.