by Kevon Browne
St. Kitts and Nevis (WINN) – The World Bank cut its 2023 growth forecasts on January 10, which according to international reports, is “teetering on the brink of recession” for many countries.
The impact of interest rate hikes, Russia’s war in Ukraine, and other major economic issues have forced the expected global GDP growth to 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993.
Initially, the World Bank had forecast 2023 global growth at 3.0% and international growth in 2024 to pick up to 2.7% — below the 2.9% estimate for 2022 — and said average growth for the 2020-2024 period would be under 2% — the slowest five-year pace since 1960.
While the threat of a recession was reported on, and people were warned not to make life-changing purchases and to continue saving for a rainy day in the last quarter of 2022, global economic issues persist as countries, governments, and people settle into the new year.
The looming threat of recession then begs the question, posed to the masses, to those that make up the driving force of spend, what are your financial goals for 2023?
The Eastern Caribbean Central Bank asked that question while speaking with Adélé L. M. Stowe, Director of Finance at Chamberlain University, in Episode one of ECCB Connects 21st season.
The conversation centred on budgeting as a critical strategy to help manage money to achieve one’s financial goals, whether an individual, a small independent enterprise or even a larger global conglomerate.
In planning a budget, the Finance Director says that plans should be made thoroughly, thoughtfully and in alignment with what you are trying to achieve.
“A few key steps that we would take if we’re thinking through our planning process – Number one would be what are the goals that you want to accomplish; personal goals, what are the things of your organisation and then how do those goals align with your long term plan? And that’s important if you’re planning for a particular period or shorter term, like a fiscal period, maybe a quarter, maybe a half a year, over a couple of months if you’re talking about personal financial goals. Is that in alignment with what you want to accomplish in the longer term? Because what you don’t want to do is set a short-term goal that may derail you from something that you want to accomplish in the longer term.”
Stowe warned people against making plans without evaluating their current situation with enough thought that if financial shifts are necessary, they can be easily made.
Another critical step in effective and efficient budgeting is putting all activities necessary to accomplish a financial goal on paper.
“What are my sales goals or revenue goals or savings goals if you’re a person? What are my expenses that will drive my business, or what my expenses need to be in order to drive my savings if I’m a person and then what ultimately is my bottom line going to be? Does it align with that first step; setting my goals? If I want to grow my business by X percent, what resources do I need to be able to accomplish that? What top-line revenue do I need to drive to accomplish that? And then I need to go out translate that to my budget, which is that fiscal summary for that period of time, and then we get to a step where we need to go execute on the budget.”
While setting a budget and fiscal plan is essential in accomplishing financial goals, secondary plans and contingencies must be considered as life remain dynamic, and issues may arise where the plans for the budget may be derailed.
On a personal level, if a budget is derailed, Stowe encourages individuals to reevaluate expense plans, goals for the year and some room for flexibility. After setting a budget, measurements, monitoring and evaluating should continue to work in tandem with the current economic standing.
Watch the full episode here: https://fb.watch/h-P0d4WJgO/.