Archive for May, 2007
How to Establish and Stay on Budget
Most contractors I run across confess “I never have as much money at the end of the year as I expect to.” Do you suffer the same fate?
Do you arrive at year end wondering where your money went to? If so, I’d bet you’d like to learn how to avoid that ugly outcome.
Pay attention here, I’m going to let you in on a little secret that will help you end those unpleasant year-end surprises. Lean in close. Don’t tell anyone about this. It’s so secretive that few contractors do it. Are you ready?
Use a budget
That’s it. That’s all it takes. Create a budget, track the variances, and take corrective action when necessary. Class dismissed.
Oh, you want to hear more? Okay. Keep reading to learn how to put a stop to those nasty year-end surprises.
Annual budgets allow you to stay on top of your financial progress as your year unfolds. They arm you with the ability to reel in expenses before they kill your bottom line. They force you to think through your business’ strategy and its resource allocations.
When you don’t have a budget to monitor, or don’t monitor the one you have, you are destined to arrive at year-end thinking “Rats. Where’d my money go?”
Contractors’ aversion to budgeting has always struck me as funny (not in the ha-ha sense). On the one hand, contractors tend to be obsessive about planning field work. They know that letting their field crews sort out what to do from day to day is a recipe for disaster. But on the other hand, they don’t apply that reasoning to their business. Lack of business planning leads to poor financial performance; it’s as simple as that.
You need a budget, it needs to reflect the reality of your market, you need to keep a close eye on its progress, and you need to take corrective action when it’s called for. Anything short of this will leave you with that “What happened?” feeling.
Look at the Market
Before diving into the how-to budget details, let’s make sure you understand the connections between your budget, your business plan, and your market.
Your budget is a financial representation of your business plan. Your business plan’s purpose is to take advantage of profitable opportunities in the market. Budgeting should not be attempted until your business plan has been developed.
Your business plan should be aligned to the size of your market, the prices your market will pay, and the cost of serving its needs. You can only make as much money as your market will support and your business plan will deliver. Budget accordingly.
Contractors often put the cart before the horse. They set sales, overhead, and net income goals, put them into a budget, and then try to craft a strategy to fulfill them. That sequence totally ignores the market.
It’s foolhardy to create the financial model and then try to craft a business plan that fits it when the business plan hasn’t been tuned to the market. First strategy; then budget; then meet the budget; then build a bulging bank account.
Your budget will be developed through five stages: preparation, rough draft, refinement, reality check, and rollout.
Stage 1 – Preparation
Unless you implement a new sales and marketing plan, you improve labor productivity, or you reduce overhead, your financial performance will be controlled by the market and the economy. If they grow, you will make more money. If they shrink, you will make less, or even lose, money.
In this industry, past performance is the best predictor of future performance – unless you force change. Build your budget on the foundation of your recent three year financial performance. To do that, gather together the balance sheets, income statements, and cash flow statements for those years.
Next, tap as many information sources as possible to gain an informed view of upcoming market changes. Visit with your banker. Visit with your insurance and bond agent. Buy construction forecast data from McGraw-Hill or a similar provider. Search the census bureaus’ website for reports on economic projections. Call the Federal Reserve and see what reports they have available. Call your local economic development councils.
Eventually, you will discover the experts’ consensus opinion. Even they can be completely blindsided by turns in the economy, but they are the most informed group to listen to.
Go over the information with your executive team. Reach consensus on your upcoming market opportunities.
Here are the Stage 1 steps.
Grab the last three sets of annual statements.
Gather up construction forecasts.
Discuss market opportunities.
Stage 2 – Rough draft
The purpose of the rough draft is to give you a reasonable starting point. Your rough draft will not consider changes to your business plan nor changes in the economy. To create the rough draft, study the income statements from the last three years and determine:
Your sales trends
Your direct cost trends
Your administrative overhead trends
Your sales and marketing expense trends
Your operations support trends
Your labor burden trends
Your average gross margin
Take your most recent income statement and adjust each line item for the trend (up or down) or jot down the three year average, whichever you feel is most appropriate.
Here are the Stage 2 steps.
Determine trends and averages for each income statement line item.
Decide whether the average or the trend is the most appropriate assumption.v
Mark-up last year’s income statement accordingly.
Stage 3 – Refinement
Now, adjust the numbers for changes in the market and changes in your business plan.
If you expect the market to shrink, assume both your sales volume and your margins will shrink. If you expect your market to grow, assume either your sales volume or your margin will grow. Do not assume both will grow (we’re not going to go into this but it usually holds true).
Now estimate the cost impact of new business strategies. For example, you may decide to expand sales by pursuing the office building market. In order to land the work, you will authorize a $10,000.00 advertising campaign consisting of magazine advertisements, direct mail, and client entertainment. This spending would be on top of the advertising you do to generate your current work load. Your advertising budget needs to reflect the additional $10,000 investment.
When thinking through your business plan, look at closely the cost impacts of:
Increased advertising to pursue new market
Expansion of sales staff
Purchase of new equipment
Adding office staff
Implementing or altering management information system
Employee training and development
Changing the bonus plan
Entering a new geographic territory complete with local office
Pay raises
Rising health care premiums
Another budget impact you need to account for is improved selling performance. Assume your sales team persuaded another 20% of your clients to hand you negotiated contracts. You budget would need to reflect the higher mark-ups associated with negotiated contracts.
You are ready to finalize your first draft. Adjust the trended or average numbers for each line item by the impacts of your business plan. Re-type the document so that it is easy to ready.
Here are the Stage 3 steps.
Verify your labor pool and operations support staff team can handle the projected work load.
Verify the targets for sales volume and direct cost markup are reasonable
Verify increases in marketing and sales expenses.
Update equipment expense and depreciation to accommodate new equipment needs.
Update sales volume goal.
Update direct cost margin goal.
Calculate expected work load (labor, material, equipment costs).
Revise and re-type your budget.
Stage 4 – Reality Check
One of the primary reasons contractors fail to hit their profit goals is because they are overly optimistic about their gross margins. The time has arrived for everyone to join a no-holds-barred discussion on operations and sales.
You need to challenge all assumptions made that the crews will perform better than they have in the past. No baseless, pie-in-the-sky claims are allowed. Unless, there is a reason to believe turnover has been greatly reduced, more efficient equipment has been purchased, or the operations management team will be able reduce downtime and rework, do not assume your labor will be more productive than in the past.
The other claim that you must question strongly is the ability of the sales and marketing team to generate better quality leads and better paying jobs. Sales and marketing personnel are highly optimistic individuals by nature. Take their promises of greater glory with a grain of salt. Believe it when you see it, not before.
In other words, don’t take their word on gross margins at face value. You need to analyze it segment by segment. Discuss the real mark-ups each segments produces. Pull out your job costing reports to see what the real mark-ups ended up being.
Ask them why they believe the leads will be better and why the margins will improve. Segment by segment, forecast total sales and margins. Pull them together and compare to your budgeted direct cost and gross profit.
Adjust your budget accordingly. Now, you’ve finalized your budget. Time to roll it out.
Here are your Stage 4 steps.
Call a meeting with your top operations and sales personnel.
Review and discuss field performance and projections for improvement.
Review and discuss advertising and selling segment by segment.
Tweak the budget based on the outcomes of these conversations.
Now, you’ve finalized your budget. Time to roll it out.
Stage 5 –Roll-out
Now that you’ve finalized the 12 month budget, you need to break it into manageable chunks (12 chunks that is). Create a spreadsheet with 14 columns. Label them by month. Each row is an income statement expense. The first column is the name of the expense. the second column is the total for the year. The third column is for January, the fourth for February, and so on.
Look at each income statement line item and determine whether it is an expense that stays consistent each month (e.g. office rent) or varies monthly. Many overhead expenses are billed twice a year or quarterly. Put the appropriate value under each month. The total for the months must equal the total for the year.
Pull up monthly sales for the last three years. Calculate the weighting of the sales per month. For example, if you typically sell $400,000 in July out of $3,200,000 annually, July accounts for 12.5% of your sales. Calculate 12.5% of your budgeted sales and direct expenses and put them in July’s column.
Continue filling out your spreadsheet until you have the entire budget accounted.
Make copies of the detailed monthly budget and distribute to all individuals who have spending authority. Pull them into a meeting, shut off the cell phones, and explain the detailed budget to them. They need to understand the expenditures planned by the budget, the logic behind the expenditures, the assumed gross margins, and the planned timing of the expenditures.
A word is in order here regarding cash accounting versus accrual accounting. If you are running your business on the cash accounting basis, you should set up your budget and track your progress on the accrual method. Cash accounting is great for taxes but terribly misleading for managing a business.
Here are the Stage 5 Steps
Allocate the annual expenses to the appropriate months.
Determine the historic pattern of your monthly sales.
Create monthly budgets for sales, field costs, overhead, and profit.
Present the detailed budget to your management team.
By completing the 22 step budgeting procedure, you now have in hand the tool that empowers you to manage your year end performance. Of course, the key word in there is “manage.”
Tracking
The second reason contractors fail to hit their year end financial targets is because they fail to track their progress against budget and take corrective action as necessary. Have your accounting staff generate an income statement and cash flow statement at the end of each month.
A word is also in order regarding your accounting staff. Whether inside or outsourced, your accounting staff must get you these reports no later than the seventh of the month. Hold them accountable to that date. They will probably whine like mad but ignore it. Timely reporting must be a non-negotiable duty of their position or service.
The monthly income statement should show:
Budget value for the month
Actual value for the month
Budget value year-to-date
Actual value year-to-date
Actual vs. budget variance for month
Actual vs. budget variance year-to-date
Projected year end based on current trend.
Gather together your management team, review and discuss the income and cash statements.
Taking Action
Budgets do not produce the results. Managing to them is what produces the results.
As variances become apparent, investigate their cause and take all necessary action. That may mean visiting with someone or some group who is underperforming and discussing things can be done to meet the performance goals. Taking action may mean revising the budget in accordance with changes in the economy and market.
When spending exceeds plan, or sales fall short, discuss the situation with your management team and decide how to get back on plan, and whether the spending needs to be scaled back to offset poor sales or increased to take advantage of unexpected opportunities.
You should not ignore unforeseen opportunities just because money wasn’t set aside for them. Adjust the budget as better-than-expected opportunities arise. Reallocate your resources or increase your budget to accommodate the needed investment.
Cash Budget
Translating your monthly income budget into a monthly cash budget is surprisingly easy and highly beneficial. Copy your income statement spreadsheet and translate the monthly sales figures into monthly cash receipts.
The way to do this is to look at your aged receivables. If you typically receive your money 45 days after the job, then your inbound cash trails your sales by one and a half months.
Your outbound cash is also pretty easy to figure. You field labor gets paid weekly. Your office staff twice monthly or so. Your materials are due in 30 days. The overhead expenses are already scheduled. Lease payments are due every 30 days.
Monitor your cash flow budget just like you do your income budget. Go over them at the same time. Usually, when cash flow is becoming a problem it is due to slow paying clients. You need to know that as quickly as possible so that you can chase the money owed to you.
Final Reminder
To run a construction company successfully, you must pay attention to the rate at which your business generates gross profit and the rate at which it spends money on overhead. The only way you can know whether those rates are acceptable as your year unfolds is to create a budget and keep an eye on its progress. Otherwise, you might as well keep expecting those ugly year-end surprises.
By: Lori Smith
About the Author:
Do you arrive at year end wondering where your money went to? If so, I’d bet you’d like to learn how to avoid that ugly outcome.
Pay attention here, I’m going to let you in on a little secret that will help you end those unpleasant year-end surprises. Lean in close. Don’t tell anyone about this. It’s so secretive that few contractors do it. Are you ready?
Use a budget
That’s it. That’s all it takes. Create a budget, track the variances, and take corrective action when necessary. Class dismissed.
Oh, you want to hear more? Okay. Keep reading to learn how to put a stop to those nasty year-end surprises.
Annual budgets allow you to stay on top of your financial progress as your year unfolds. They arm you with the ability to reel in expenses before they kill your bottom line. They force you to think through your business’ strategy and its resource allocations.
When you don’t have a budget to monitor, or don’t monitor the one you have, you are destined to arrive at year-end thinking “Rats. Where’d my money go?”
Contractors’ aversion to budgeting has always struck me as funny (not in the ha-ha sense). On the one hand, contractors tend to be obsessive about planning field work. They know that letting their field crews sort out what to do from day to day is a recipe for disaster. But on the other hand, they don’t apply that reasoning to their business. Lack of business planning leads to poor financial performance; it’s as simple as that.
You need a budget, it needs to reflect the reality of your market, you need to keep a close eye on its progress, and you need to take corrective action when it’s called for. Anything short of this will leave you with that “What happened?” feeling.
Look at the Market
Before diving into the how-to budget details, let’s make sure you understand the connections between your budget, your business plan, and your market.
Your budget is a financial representation of your business plan. Your business plan’s purpose is to take advantage of profitable opportunities in the market. Budgeting should not be attempted until your business plan has been developed.
Your business plan should be aligned to the size of your market, the prices your market will pay, and the cost of serving its needs. You can only make as much money as your market will support and your business plan will deliver. Budget accordingly.
Contractors often put the cart before the horse. They set sales, overhead, and net income goals, put them into a budget, and then try to craft a strategy to fulfill them. That sequence totally ignores the market.
It’s foolhardy to create the financial model and then try to craft a business plan that fits it when the business plan hasn’t been tuned to the market. First strategy; then budget; then meet the budget; then build a bulging bank account.
Your budget will be developed through five stages: preparation, rough draft, refinement, reality check, and rollout.
Stage 1 – Preparation
Unless you implement a new sales and marketing plan, you improve labor productivity, or you reduce overhead, your financial performance will be controlled by the market and the economy. If they grow, you will make more money. If they shrink, you will make less, or even lose, money.
In this industry, past performance is the best predictor of future performance – unless you force change. Build your budget on the foundation of your recent three year financial performance. To do that, gather together the balance sheets, income statements, and cash flow statements for those years.
Next, tap as many information sources as possible to gain an informed view of upcoming market changes. Visit with your banker. Visit with your insurance and bond agent. Buy construction forecast data from McGraw-Hill or a similar provider. Search the census bureaus’ website for reports on economic projections. Call the Federal Reserve and see what reports they have available. Call your local economic development councils.
Eventually, you will discover the experts’ consensus opinion. Even they can be completely blindsided by turns in the economy, but they are the most informed group to listen to.
Go over the information with your executive team. Reach consensus on your upcoming market opportunities.
Here are the Stage 1 steps.
Grab the last three sets of annual statements.
Gather up construction forecasts.
Discuss market opportunities.
Stage 2 – Rough draft
The purpose of the rough draft is to give you a reasonable starting point. Your rough draft will not consider changes to your business plan nor changes in the economy. To create the rough draft, study the income statements from the last three years and determine:
Your sales trends
Your direct cost trends
Your administrative overhead trends
Your sales and marketing expense trends
Your operations support trends
Your labor burden trends
Your average gross margin
Take your most recent income statement and adjust each line item for the trend (up or down) or jot down the three year average, whichever you feel is most appropriate.
Here are the Stage 2 steps.
Determine trends and averages for each income statement line item.
Decide whether the average or the trend is the most appropriate assumption.v
Mark-up last year’s income statement accordingly.
Stage 3 – Refinement
Now, adjust the numbers for changes in the market and changes in your business plan.
If you expect the market to shrink, assume both your sales volume and your margins will shrink. If you expect your market to grow, assume either your sales volume or your margin will grow. Do not assume both will grow (we’re not going to go into this but it usually holds true).
Now estimate the cost impact of new business strategies. For example, you may decide to expand sales by pursuing the office building market. In order to land the work, you will authorize a $10,000.00 advertising campaign consisting of magazine advertisements, direct mail, and client entertainment. This spending would be on top of the advertising you do to generate your current work load. Your advertising budget needs to reflect the additional $10,000 investment.
When thinking through your business plan, look at closely the cost impacts of:
Increased advertising to pursue new market
Expansion of sales staff
Purchase of new equipment
Adding office staff
Implementing or altering management information system
Employee training and development
Changing the bonus plan
Entering a new geographic territory complete with local office
Pay raises
Rising health care premiums
Another budget impact you need to account for is improved selling performance. Assume your sales team persuaded another 20% of your clients to hand you negotiated contracts. You budget would need to reflect the higher mark-ups associated with negotiated contracts.
You are ready to finalize your first draft. Adjust the trended or average numbers for each line item by the impacts of your business plan. Re-type the document so that it is easy to ready.
Here are the Stage 3 steps.
Verify your labor pool and operations support staff team can handle the projected work load.
Verify the targets for sales volume and direct cost markup are reasonable
Verify increases in marketing and sales expenses.
Update equipment expense and depreciation to accommodate new equipment needs.
Update sales volume goal.
Update direct cost margin goal.
Calculate expected work load (labor, material, equipment costs).
Revise and re-type your budget.
Stage 4 – Reality Check
One of the primary reasons contractors fail to hit their profit goals is because they are overly optimistic about their gross margins. The time has arrived for everyone to join a no-holds-barred discussion on operations and sales.
You need to challenge all assumptions made that the crews will perform better than they have in the past. No baseless, pie-in-the-sky claims are allowed. Unless, there is a reason to believe turnover has been greatly reduced, more efficient equipment has been purchased, or the operations management team will be able reduce downtime and rework, do not assume your labor will be more productive than in the past.
The other claim that you must question strongly is the ability of the sales and marketing team to generate better quality leads and better paying jobs. Sales and marketing personnel are highly optimistic individuals by nature. Take their promises of greater glory with a grain of salt. Believe it when you see it, not before.
In other words, don’t take their word on gross margins at face value. You need to analyze it segment by segment. Discuss the real mark-ups each segments produces. Pull out your job costing reports to see what the real mark-ups ended up being.
Ask them why they believe the leads will be better and why the margins will improve. Segment by segment, forecast total sales and margins. Pull them together and compare to your budgeted direct cost and gross profit.
Adjust your budget accordingly. Now, you’ve finalized your budget. Time to roll it out.
Here are your Stage 4 steps.
Call a meeting with your top operations and sales personnel.
Review and discuss field performance and projections for improvement.
Review and discuss advertising and selling segment by segment.
Tweak the budget based on the outcomes of these conversations.
Now, you’ve finalized your budget. Time to roll it out.
Stage 5 –Roll-out
Now that you’ve finalized the 12 month budget, you need to break it into manageable chunks (12 chunks that is). Create a spreadsheet with 14 columns. Label them by month. Each row is an income statement expense. The first column is the name of the expense. the second column is the total for the year. The third column is for January, the fourth for February, and so on.
Look at each income statement line item and determine whether it is an expense that stays consistent each month (e.g. office rent) or varies monthly. Many overhead expenses are billed twice a year or quarterly. Put the appropriate value under each month. The total for the months must equal the total for the year.
Pull up monthly sales for the last three years. Calculate the weighting of the sales per month. For example, if you typically sell $400,000 in July out of $3,200,000 annually, July accounts for 12.5% of your sales. Calculate 12.5% of your budgeted sales and direct expenses and put them in July’s column.
Continue filling out your spreadsheet until you have the entire budget accounted.
Make copies of the detailed monthly budget and distribute to all individuals who have spending authority. Pull them into a meeting, shut off the cell phones, and explain the detailed budget to them. They need to understand the expenditures planned by the budget, the logic behind the expenditures, the assumed gross margins, and the planned timing of the expenditures.
A word is in order here regarding cash accounting versus accrual accounting. If you are running your business on the cash accounting basis, you should set up your budget and track your progress on the accrual method. Cash accounting is great for taxes but terribly misleading for managing a business.
Here are the Stage 5 Steps
Allocate the annual expenses to the appropriate months.
Determine the historic pattern of your monthly sales.
Create monthly budgets for sales, field costs, overhead, and profit.
Present the detailed budget to your management team.
By completing the 22 step budgeting procedure, you now have in hand the tool that empowers you to manage your year end performance. Of course, the key word in there is “manage.”
Tracking
The second reason contractors fail to hit their year end financial targets is because they fail to track their progress against budget and take corrective action as necessary. Have your accounting staff generate an income statement and cash flow statement at the end of each month.
A word is also in order regarding your accounting staff. Whether inside or outsourced, your accounting staff must get you these reports no later than the seventh of the month. Hold them accountable to that date. They will probably whine like mad but ignore it. Timely reporting must be a non-negotiable duty of their position or service.
The monthly income statement should show:
Budget value for the month
Actual value for the month
Budget value year-to-date
Actual value year-to-date
Actual vs. budget variance for month
Actual vs. budget variance year-to-date
Projected year end based on current trend.
Gather together your management team, review and discuss the income and cash statements.
Taking Action
Budgets do not produce the results. Managing to them is what produces the results.
As variances become apparent, investigate their cause and take all necessary action. That may mean visiting with someone or some group who is underperforming and discussing things can be done to meet the performance goals. Taking action may mean revising the budget in accordance with changes in the economy and market.
When spending exceeds plan, or sales fall short, discuss the situation with your management team and decide how to get back on plan, and whether the spending needs to be scaled back to offset poor sales or increased to take advantage of unexpected opportunities.
You should not ignore unforeseen opportunities just because money wasn’t set aside for them. Adjust the budget as better-than-expected opportunities arise. Reallocate your resources or increase your budget to accommodate the needed investment.
Cash Budget
Translating your monthly income budget into a monthly cash budget is surprisingly easy and highly beneficial. Copy your income statement spreadsheet and translate the monthly sales figures into monthly cash receipts.
The way to do this is to look at your aged receivables. If you typically receive your money 45 days after the job, then your inbound cash trails your sales by one and a half months.
Your outbound cash is also pretty easy to figure. You field labor gets paid weekly. Your office staff twice monthly or so. Your materials are due in 30 days. The overhead expenses are already scheduled. Lease payments are due every 30 days.
Monitor your cash flow budget just like you do your income budget. Go over them at the same time. Usually, when cash flow is becoming a problem it is due to slow paying clients. You need to know that as quickly as possible so that you can chase the money owed to you.
Final Reminder
To run a construction company successfully, you must pay attention to the rate at which your business generates gross profit and the rate at which it spends money on overhead. The only way you can know whether those rates are acceptable as your year unfolds is to create a budget and keep an eye on its progress. Otherwise, you might as well keep expecting those ugly year-end surprises.
By: Lori Smith
About the Author:
Lori Smith a webmaster of http://www.truebluecontractors.com “>TrueBlueContractors.com allows http://www.truebluecontractors.com “>contractors to spend less money advertising, give fewer estimates, and get more work.
Ima Hardister
What was easier high school or university workwise/time budgeting wise?
Darrell Latroel asked:
May sound stupid but my dad said he found university easier which baffled me so I wonder what you all think.
Karena Quasdorf
May sound stupid but my dad said he found university easier which baffled me so I wonder what you all think.
Karena Quasdorf
Top Family Budgeting Tips
Key Reasons for Managing Your Budget
- You Have Limited Income: Virtually everyone has limited or fixed income. Without budgeting you are being controlled by your environment. If you have a plan, you are more in control of your money. Without a budget, you may not really know you are spending more money than you are earning.
- So That You Know Your Limits: Knowing what your monthly expenses are projected to be and what they actually are will help you keep track of how much money you have left over for future goals and needs.
- You Have Unlimited Demands: There is an endless demand on your finances. Our commercial capitalistic society is constantly calling out for you to buy. If you have minor children, the demands are greatly increased by the things that they want, the activities they are in, and the schools they attend.
- You Want Freedom Not Bondage: Budgeting seems to be restrictive to some people. The reality is that we have to make choices between what we want at the moment and our regular bills and goals for the future. However, there is freedom in knowing what your limits are. Many people find this liberating, because it creates the opportunities to grow and mature.
- You Have Future Goals: If you are sacrificing today, it helps to know what you are saving for in the future. Obtain a financial plan so that you will know what your goals are and for what you are saving.
- You Want to be More Aware of Where Money is Going: If you do not have a budget, you may have no idea where your money is going. Knowing where you money is going will help you identify if you are spending too much money in specific areas.
- You Want Less Stress: Spending without a plan and a budget increases your stress because you do not have a well thought out plan for paying your bills and you may spend more money for fun than you can afford. Planning and budgeting will give you the peace of mind that you are on the right track.
Contract with Yourself (and between Spouse)
Budgeting is very hard for many people; therefore, it helps to have a contract with yourself. If you are married, this agreement should include your spouse. If you work together, you will usually accomplish more than you could on your own.
I hereby resolve to:
1. Start a budget, and pay attention to it weekly and monthly
2. Not spend more money than I make
3. Be in financial partnership with my spouse with no secrets between us
4. Not borrow to purchase items that depreciate in value
5. Not let my emotions make me purchase anything, including gifts
6. Not purchase something over budget unless it was unavoidable
7. Not purchase anything that I don’t really need, no matter how good the sale is
8. Not purchase something to keep up with the Joneses
9. Not apply for any new credit cards, unless lowering interest rates
10. Pay off all credit cards monthly (I will work toward paying them off)
11. Not spend money on fun things unless I have paid my monthly bills
12. My spouse and I will both be the “fun police”
13. Include children in the budgeting exercise to teach restraint
14. Not obtain high maintenance items like a pet or hobby if I can’t afford the expenses.
15. Not buy something that costs over $50 without consulting each other and the budget
Cash Flow Management Checklist
In addition to having good budgetary habits, it also helps to take advantage of money-saving measures. The following are many of the things you can do to help you save thousands of dollars per year.
- Employ tax advisors to you avoid overpaying taxes
- Use low cost investments that have low to no commissions, fees and expenses
- Shop your loans to find lowest interest rates
- Shop your insurance for the lowest prices possible.
- Buy smaller homes and cars since they require less money to maintain and insure
- Go on cheaper vacations
- Frugal travel to lower the already large consumption of your income for gasoline
- Eat out cheap, less often and at less expensive establishments and cafes
- Spend less on food by shopping at low price grocery stores and pack your lunch
- Lower home energy consumption by employing easy to find and low cost solutions
- Break smoking and excessive eating habits to save on tobacco and fast foods
- Monitor emotions to avoid depression or stress related purchases
- Obtain from the library resources about budgeting, financial planning and spending
- Go to the library for entertainment books and DVDs
- Reduce or eliminate cable TV
Budgeting Tips
Use technology or spreadsheets:
Obtain software (or use spreadsheets) that will help you pay bills and make and monitor a budget. Devote time to it by keeping track of all expenses and enter them into your software program or monthly spreadsheets each week.
Save all receipts, bills, household documents, and tax documents:
Organize these items by category into an accordion file or drawer: e.g., auto, bank, business, credit cards, dental, medical, grocery, income, insurance, mortgage, utilities, general receipts, school information, and taxes.
Balance your checkbook:
Many people don’t balance their checkbooks each month. Budgeting software makes reconciling simple, but you can read the back of your statement or make an appointment with your banker if you need to learn this skill manually.
Tax Time:
If you use budgeting software, you can run a tax summary report before you work on your taxes. If not, and if you itemize your taxes (Sched.A), you must total the appropriate columns in your spreadsheets, e.g., Medical expenses (Your accountant may provide you with an organizer to help you get ready for tax time.) Remember to place quarterly and yearly expenses on the appropriate month in your budget so that you do not overspend. For example, annual insurance payments, quarterly tax estimated payments, annual homeowners association dues, etc.
Summary
Good cash flow management is key to implementing any financial plan; commit to doing this well. No one likes self-discipline, but it is actually good for us. With proper management of your finances, you will become more confident and less stressed about your future. Remember, one bad financial decision can sometimes take years to undo. Be very careful with all decisions you make.
By: Kent Irwin
About the Author:
- You Have Limited Income: Virtually everyone has limited or fixed income. Without budgeting you are being controlled by your environment. If you have a plan, you are more in control of your money. Without a budget, you may not really know you are spending more money than you are earning.
- So That You Know Your Limits: Knowing what your monthly expenses are projected to be and what they actually are will help you keep track of how much money you have left over for future goals and needs.
- You Have Unlimited Demands: There is an endless demand on your finances. Our commercial capitalistic society is constantly calling out for you to buy. If you have minor children, the demands are greatly increased by the things that they want, the activities they are in, and the schools they attend.
- You Want Freedom Not Bondage: Budgeting seems to be restrictive to some people. The reality is that we have to make choices between what we want at the moment and our regular bills and goals for the future. However, there is freedom in knowing what your limits are. Many people find this liberating, because it creates the opportunities to grow and mature.
- You Have Future Goals: If you are sacrificing today, it helps to know what you are saving for in the future. Obtain a financial plan so that you will know what your goals are and for what you are saving.
- You Want to be More Aware of Where Money is Going: If you do not have a budget, you may have no idea where your money is going. Knowing where you money is going will help you identify if you are spending too much money in specific areas.
- You Want Less Stress: Spending without a plan and a budget increases your stress because you do not have a well thought out plan for paying your bills and you may spend more money for fun than you can afford. Planning and budgeting will give you the peace of mind that you are on the right track.
Contract with Yourself (and between Spouse)
Budgeting is very hard for many people; therefore, it helps to have a contract with yourself. If you are married, this agreement should include your spouse. If you work together, you will usually accomplish more than you could on your own.
I hereby resolve to:
1. Start a budget, and pay attention to it weekly and monthly
2. Not spend more money than I make
3. Be in financial partnership with my spouse with no secrets between us
4. Not borrow to purchase items that depreciate in value
5. Not let my emotions make me purchase anything, including gifts
6. Not purchase something over budget unless it was unavoidable
7. Not purchase anything that I don’t really need, no matter how good the sale is
8. Not purchase something to keep up with the Joneses
9. Not apply for any new credit cards, unless lowering interest rates
10. Pay off all credit cards monthly (I will work toward paying them off)
11. Not spend money on fun things unless I have paid my monthly bills
12. My spouse and I will both be the “fun police”
13. Include children in the budgeting exercise to teach restraint
14. Not obtain high maintenance items like a pet or hobby if I can’t afford the expenses.
15. Not buy something that costs over $50 without consulting each other and the budget
Cash Flow Management Checklist
In addition to having good budgetary habits, it also helps to take advantage of money-saving measures. The following are many of the things you can do to help you save thousands of dollars per year.
- Employ tax advisors to you avoid overpaying taxes
- Use low cost investments that have low to no commissions, fees and expenses
- Shop your loans to find lowest interest rates
- Shop your insurance for the lowest prices possible.
- Buy smaller homes and cars since they require less money to maintain and insure
- Go on cheaper vacations
- Frugal travel to lower the already large consumption of your income for gasoline
- Eat out cheap, less often and at less expensive establishments and cafes
- Spend less on food by shopping at low price grocery stores and pack your lunch
- Lower home energy consumption by employing easy to find and low cost solutions
- Break smoking and excessive eating habits to save on tobacco and fast foods
- Monitor emotions to avoid depression or stress related purchases
- Obtain from the library resources about budgeting, financial planning and spending
- Go to the library for entertainment books and DVDs
- Reduce or eliminate cable TV
Budgeting Tips
Use technology or spreadsheets:
Obtain software (or use spreadsheets) that will help you pay bills and make and monitor a budget. Devote time to it by keeping track of all expenses and enter them into your software program or monthly spreadsheets each week.
Save all receipts, bills, household documents, and tax documents:
Organize these items by category into an accordion file or drawer: e.g., auto, bank, business, credit cards, dental, medical, grocery, income, insurance, mortgage, utilities, general receipts, school information, and taxes.
Balance your checkbook:
Many people don’t balance their checkbooks each month. Budgeting software makes reconciling simple, but you can read the back of your statement or make an appointment with your banker if you need to learn this skill manually.
Tax Time:
If you use budgeting software, you can run a tax summary report before you work on your taxes. If not, and if you itemize your taxes (Sched.A), you must total the appropriate columns in your spreadsheets, e.g., Medical expenses (Your accountant may provide you with an organizer to help you get ready for tax time.) Remember to place quarterly and yearly expenses on the appropriate month in your budget so that you do not overspend. For example, annual insurance payments, quarterly tax estimated payments, annual homeowners association dues, etc.
Summary
Good cash flow management is key to implementing any financial plan; commit to doing this well. No one likes self-discipline, but it is actually good for us. With proper management of your finances, you will become more confident and less stressed about your future. Remember, one bad financial decision can sometimes take years to undo. Be very careful with all decisions you make.
By: Kent Irwin
About the Author:
Kent E. Irwin, ChFC, CLU, CAP, co-founder and CEO of eFinplan.com. eFinPLAN is the first and only web-based comprehensive consumer financial planning software designed for people who are trying to do a lot of their own financial planning. Find out more about how do-your-self financial planning at eFinPLAN.com
Dorian Osterhouse
Camera Cafè – Riduzione Di Budget
TheKingOfTheMountain asked:
puntata di camera cafè dalla prima serie
Ike Mannon
Budgeting Your Way To Being Debt-Free
asily accrue a debt but getting rid of it can take the hardest time. In these unstable times, getting rid of your credit card debt is one aspect of your finances you should really focus on today. It is the urgent time to take the necessary steps now and learn how to live only out of your income. Let me introduce you to the concept of budgeting. One the worst reactions most people have are upon hearing cases of bankruptcy. And for us to avoid that dreaded situation, it is time to face the reality and delve deeper on the root of the problem. Before starting out, we definitely need a plan that will guide us with our financial tracking and that will keep limits to our spending. That plan is the very household term called budget. A budget is basically a plan, you read that right. When you create a budget, you are putting a record of your supposed spending with the corresponding purpose before your month starts. For a lot of people, this can be perceived as a block that keeps them constrained. Naturally, the freedom to spend and the concept of budgeting really do not go together. Taking it at an angle where you see and know that your hard-earned money is spent with good intentions, you will in fact experience the real freedom. For many who experienced this awakening, they say that the realization seems to make them more productive than constrained. In the course of the process, they have found out that they even earned more money when they followed a realistic budget. Sticking to it, though, is a very challenging hurdle yet can be very rewarding when accomplished. As a tip, take your time to tally up all of your monthly debts into a record. Figure out how much you spend on gas, groceries, and other necessary items. Take into account all the rest of the spending. Observe and see if you can cut up some of those extra spending you have throughout the month. Determine how much you can make if you cut back on those expenses. Usual expenses you can reduce are cell phone plans, cable TV programming package, gym and club memberships, and that extra night out session. These changes, although painful, will give you more extra money to add to your payments for getting rid of debt. This time where you are in the midway of getting out of a credit card debt cycle, the focus with your budgeting is very crucial. By deciding today to take some action and be responsible with your spending, this will save you money for the long term and regain your credit standing. At the end, by helping yourself you are ensured of a much better financial situation.
By: Paul Easton
About the Author:
By: Paul Easton
About the Author:
Does you Debt **** you Down? Paul J. Easton offers you how get out of debt with Free helpful Guides: http://www.Howtogetridofdebt.net/ We can Show you How to get rid of Debt – Bonus Credit Reports coming soon!
Jack
What are operating budget and performance budgeting? Where I can find info and definition?
Susy asked:
I want to know about the operating budget and performance budgeting in hospital or Emergency Department setting, including definition, examples, and explanations. Could you recommend some Web sites? Thanks a lot.
Kevin Okihara
I want to know about the operating budget and performance budgeting in hospital or Emergency Department setting, including definition, examples, and explanations. Could you recommend some Web sites? Thanks a lot.
Kevin Okihara
Wonga Budget Calculator
Breaking and creating habits is not an easy task. Of course we all know this because we’ve entered many a New Year with high hopes of starting a fitness routine, quitting smoking, not drinking, etc only to succumb to our old ways within a few weeks.
When it comes to financial health and well-being, I strongly encourage taking the time to properly implement healthy habits. Whether it’s sitting down once a month to reconcile your current account, planning for retirement or saving up for a deposit on a flat or to buy your first car, you should set a goal beforehand so you can appreciate your efforts and success when you cross the finish line.
To create a new habit, it’s best to pick one thing to focus on instead of trying to create a whole new you in a brief window of time. Think of how long it took to create your current habits, years, right?! So let’s just take a baby step with one new habit for now.
If you’re a newbie to the world of personal finance, welcome. Taking control of your own financial health and well-being is very empowering and it’s a good habit that will serve you for years to come. With the novices in mind, let’s start with a good basic habit of creating a budget. Since creating a budget is only a one-off event, it doesn’t have to become habit forming, however maintaining and updating your budget is another story.
I’ve created a number of budgets in my limited years as a financially independent adult. On numerous occasions I’ve torn a page from a pad of paper and sat down on the spot and made two columns with my income and expenses. I’ve also searched online for a free budgeting spreadsheet and saved it to my computer, and most recently I’ve begun using Wonga’s free budget calculator on their website. However you decide to make your budget, sit down within the next seven days and create your budget.
Action it: Create a budget within the next seven days!
What I like about the Wonga budget calculator is that it saves my data for future use; it breaks down expenses into different segments; and its user-friendly interface makes a sometimes unpleasant task more cheerful. I also really like the advice section at the end because it’s like my own personal cheerleader:
“Congratulations: your income is more than your regular outgoings, meaning you potentially have surplus cash which can be saved, invested, used to repay any existing credit or just enjoyed! Well done for managing to live within your means.”
Doesn’t that make you feel good? It works for me!
You can also clear all entries and start again, save it and/or print off a copy of your budget. If you think you’ve missed an expense or you just want to go back and double-check your work, you can simply click on the “step 1…2…3” circles at the top to go back to the correct page and make changes.
Become a registered user of the Wonga budget calculator today and create a good financial habit.
By: Jamey Wheeler
About the Author:
When it comes to financial health and well-being, I strongly encourage taking the time to properly implement healthy habits. Whether it’s sitting down once a month to reconcile your current account, planning for retirement or saving up for a deposit on a flat or to buy your first car, you should set a goal beforehand so you can appreciate your efforts and success when you cross the finish line.
To create a new habit, it’s best to pick one thing to focus on instead of trying to create a whole new you in a brief window of time. Think of how long it took to create your current habits, years, right?! So let’s just take a baby step with one new habit for now.
If you’re a newbie to the world of personal finance, welcome. Taking control of your own financial health and well-being is very empowering and it’s a good habit that will serve you for years to come. With the novices in mind, let’s start with a good basic habit of creating a budget. Since creating a budget is only a one-off event, it doesn’t have to become habit forming, however maintaining and updating your budget is another story.
I’ve created a number of budgets in my limited years as a financially independent adult. On numerous occasions I’ve torn a page from a pad of paper and sat down on the spot and made two columns with my income and expenses. I’ve also searched online for a free budgeting spreadsheet and saved it to my computer, and most recently I’ve begun using Wonga’s free budget calculator on their website. However you decide to make your budget, sit down within the next seven days and create your budget.
Action it: Create a budget within the next seven days!
What I like about the Wonga budget calculator is that it saves my data for future use; it breaks down expenses into different segments; and its user-friendly interface makes a sometimes unpleasant task more cheerful. I also really like the advice section at the end because it’s like my own personal cheerleader:
“Congratulations: your income is more than your regular outgoings, meaning you potentially have surplus cash which can be saved, invested, used to repay any existing credit or just enjoyed! Well done for managing to live within your means.”
Doesn’t that make you feel good? It works for me!
You can also clear all entries and start again, save it and/or print off a copy of your budget. If you think you’ve missed an expense or you just want to go back and double-check your work, you can simply click on the “step 1…2…3” circles at the top to go back to the correct page and make changes.
Become a registered user of the Wonga budget calculator today and create a good financial habit.
By: Jamey Wheeler
About the Author:
Jamey Wheeler writes for Wonga.com who offers short term loans online.
Kittie Santai
Top 10 Fridge Food Budget Basics – Nutrition by Natalie
psychetruth asked:
Be My Friend on MySpace http://www.myspace.com/psychtruth Top 10 Fridge Food Budget Basics – Nutrition by Natalie Originally suggestions for college girl or guy stuck with a dorm room fridge, these are nutrition basics for anyone on a budget. Please visit Natalie’s website at http://www.nutritionbynatalie.com This video was produced by psychetruth http://www.youtube.com/psychetruth http://www.myspace.com/psychtruth http://psychetruth.blogspot.com Psychetruth is empowered by TubeMogul http …
Franklin Gelder
Senate President pro Tem Darrell Steinberg on budget negotiations
CASenDems asked:
For more, visit http://democrats.sen.ca.gov
Irvin Sins