Archive for October, 2008
The Revenue Budget Is An Essential Management Information Tool
The first stage is to ensure the organisational chart clearly represents the management responsibility of each department and activity area. Financial accountancy and cost accounting should be integrated and aligned to enable detailed management information reporting and accurate financial records for each activity.
The cost and management information reporting system should be focused upon critical items where management action influences the financial result. Before setting the revenue budget the managing director, advised by the financial director or management accountant, should identify all crucial elements of the business that may have an impact on future financial performance.
Having established the departmental responsibility for producing the budget and the critical items that will be monitored the accountant should prepare budget templates and hold pre-budget meetings with the departmental heads. At these series of meetings the department heads will receive the budget templates and discuss the detail required and the timetable for submission.
Management responsibility for producing the departmental budget is crucial to achieving the financial targets and can be greatly enhanced by relating bonus payments to the level of achievement.
The work of the management accountant is to receive all the departmental budgets and put them together in a final budget for approval by the directors. Throughout the budget approval process adjustments are likely to be required to reach the overall financial objectives but once finalised each budget should be signed off by the department head responsible.
Simply taking the previous years numbers and adding a percentage is a simple solution to preparing the next year budget but is likely to be of poor quality. Quality comes from department heads and managers generally taking responsibility for their own areas of activity and agreement to the detailed financial parameters.
The sales budget critical areas are the list of individual products, additions and deletions from the existing product range, the volume of sales by product and the selling price including any proposed changes. In addition all sales channels, advertising plans, promotion and marketing campaigns should be evaluated to support the sales plan.
Sales administration costs including representatives, sales office and overheads of the sales function need to be evaluated and related directly to achieving sales budget. The higher variability included in the sales department costs can be a distinct advantage. For example, relating the numbers to be employed directly to the sales volume to be achieved, staff bonuses payable on achieving the objectives.
The production budget should start not from the numbers of people employed in the past but be set according to the numbers required to produce the budgeted production volume of the future.
The budget approval process is an ideal opportunity to consider in detail the business overheads, staff numbers and qualities required to drive the business forward. Fixed costs may be incorporated into some areas to ensure the administrative costs are controlled.
For example, a works canteen may have a fixed cost to be paid by the business each month. It would then be the responsibility of the canteen manager to provide the employees with the service required while budgeting to set the price of those services at a level which ensured the contribution from the company created a break even position each accounting period.
Too many businesses set budgets for the future based upon historical costs and sales volumes which are divorced from management responsibility. By budgeting with individual management responsibility for achieving the financial targets the overall performance of the business can be better managed and controlled to achieve the desired financial performance.
A prime responsibility of the management accountant is to evaluate the critical areas in cost accounting, ensure those areas are aligned to management responsibility and present the revenue budget compared to the financial accounts to enable the organisation to achieve and extend its financial performance.
By: Terry Cartwright
About the Author:
The cost and management information reporting system should be focused upon critical items where management action influences the financial result. Before setting the revenue budget the managing director, advised by the financial director or management accountant, should identify all crucial elements of the business that may have an impact on future financial performance.
Having established the departmental responsibility for producing the budget and the critical items that will be monitored the accountant should prepare budget templates and hold pre-budget meetings with the departmental heads. At these series of meetings the department heads will receive the budget templates and discuss the detail required and the timetable for submission.
Management responsibility for producing the departmental budget is crucial to achieving the financial targets and can be greatly enhanced by relating bonus payments to the level of achievement.
The work of the management accountant is to receive all the departmental budgets and put them together in a final budget for approval by the directors. Throughout the budget approval process adjustments are likely to be required to reach the overall financial objectives but once finalised each budget should be signed off by the department head responsible.
Simply taking the previous years numbers and adding a percentage is a simple solution to preparing the next year budget but is likely to be of poor quality. Quality comes from department heads and managers generally taking responsibility for their own areas of activity and agreement to the detailed financial parameters.
The sales budget critical areas are the list of individual products, additions and deletions from the existing product range, the volume of sales by product and the selling price including any proposed changes. In addition all sales channels, advertising plans, promotion and marketing campaigns should be evaluated to support the sales plan.
Sales administration costs including representatives, sales office and overheads of the sales function need to be evaluated and related directly to achieving sales budget. The higher variability included in the sales department costs can be a distinct advantage. For example, relating the numbers to be employed directly to the sales volume to be achieved, staff bonuses payable on achieving the objectives.
The production budget should start not from the numbers of people employed in the past but be set according to the numbers required to produce the budgeted production volume of the future.
The budget approval process is an ideal opportunity to consider in detail the business overheads, staff numbers and qualities required to drive the business forward. Fixed costs may be incorporated into some areas to ensure the administrative costs are controlled.
For example, a works canteen may have a fixed cost to be paid by the business each month. It would then be the responsibility of the canteen manager to provide the employees with the service required while budgeting to set the price of those services at a level which ensured the contribution from the company created a break even position each accounting period.
Too many businesses set budgets for the future based upon historical costs and sales volumes which are divorced from management responsibility. By budgeting with individual management responsibility for achieving the financial targets the overall performance of the business can be better managed and controlled to achieve the desired financial performance.
A prime responsibility of the management accountant is to evaluate the critical areas in cost accounting, ensure those areas are aligned to management responsibility and present the revenue budget compared to the financial accounts to enable the organisation to achieve and extend its financial performance.
By: Terry Cartwright
About the Author:
Terry Cartwright, CEO DIY Accounting, a qualified accountant in the UK, designs Accounting Software on excel spreadsheets and Payroll Software for small to medium sized business providing a complete accounting solution and also supplies Company Formation packages for new limited liability companies
Gilbert Profitt
How to Live on a Budget
Howcast asked:
They don’t call it minimum wage for nothing … How’s a guy supposed to get ahead, breaking his back 24-7, when all it gets you is chicken scratch? My friend, you need a budget.
Eugene
How much should I plan on budgeting on souviners in Disney World?
karkee07 asked:
I want to get a couple things for myslef and my boyfriend and something for my parents and brother and a couple small things for a few other people or myslef lol….any sugguestions on what to get and the best places to shop and how much moey to bring? Thanks!
Gordon
I want to get a couple things for myslef and my boyfriend and something for my parents and brother and a couple small things for a few other people or myslef lol….any sugguestions on what to get and the best places to shop and how much moey to bring? Thanks!
Gordon
Obama family goes Unplugged on Access Hollywood! (pt 3 of 4)
Insightful asked:
The Obamas – Barack, Michelle Obama, Malia Obama and Sasha Obama sit down for their first family interview in Butte, Montana. Both Michelle and her husband, Senator Barack Obama, have become fashion icons. He may **** to shop, but Senator Barack Obama is so stylin’ that Donatella Versace dedicated an entire line to him. In this portion of our Obama exclusive, the family reveals how fashion fits into their lives. Barack Hussein Obama, Jr. born August 4, 1961 is the junior United States …
Deloris Boomershine
Why Budgets Fail
A budget is important part of managing your personal finances; however, many consumers avoid this task because they think it’s too hard or a budget will stop them from enjoying their life. A budget isn’t supposed to restrict or punish you. It’s a spending plan that will help you achieve a stable financial future. So why do budgeting efforts fail?
Many consumers treat their budget like a diet. They treat a budget as if it’s a temporary fix, where they watch their spending habits until they hit their financial goal. But once that goal is met, the person goes back to their old spending habits and a few months later they’re back to where they started. Budgeting is a lifestyle choice, not a diet. It’s a part of your everyday life and helps guide you to make better financial choices.
Just like a diet, many consumers think a budget will deprive you of the things you want. However, it’s the exact opposite. A budget helps identity where you’re wasting your money, and helps you modify your spending habits to be more balanced. By cutting out the wasteful spending and watching your dollars, you’ll be able to save money for the important things in life: a home, a new car or even retirement.
Some consumers think that a budget won’t fit into their normal life. That weighing and measuring the dollars you spend just isn’t a practical, long-term strategy. However, with the Internet and debit cards, it’s easy to keep track of your spending habits. Most banks will let you export your banking statements so that you can categorize your expenses and keep track where your money is going.
Lastly, many consumers assume that budgets are rigid, inflexible financial plans. That once you make a commitment to a budget, it can’t change. But any eating plan or budget that holds to strict, inflexible rules will not last under the test of time. A healthy eating plan and budget needs to be flexible for your lifestyle.
For more information on creating a budget, download Budgeting Made Easy.
By: Kathryn Katz
About the Author:
Many consumers treat their budget like a diet. They treat a budget as if it’s a temporary fix, where they watch their spending habits until they hit their financial goal. But once that goal is met, the person goes back to their old spending habits and a few months later they’re back to where they started. Budgeting is a lifestyle choice, not a diet. It’s a part of your everyday life and helps guide you to make better financial choices.
Just like a diet, many consumers think a budget will deprive you of the things you want. However, it’s the exact opposite. A budget helps identity where you’re wasting your money, and helps you modify your spending habits to be more balanced. By cutting out the wasteful spending and watching your dollars, you’ll be able to save money for the important things in life: a home, a new car or even retirement.
Some consumers think that a budget won’t fit into their normal life. That weighing and measuring the dollars you spend just isn’t a practical, long-term strategy. However, with the Internet and debit cards, it’s easy to keep track of your spending habits. Most banks will let you export your banking statements so that you can categorize your expenses and keep track where your money is going.
Lastly, many consumers assume that budgets are rigid, inflexible financial plans. That once you make a commitment to a budget, it can’t change. But any eating plan or budget that holds to strict, inflexible rules will not last under the test of time. A healthy eating plan and budget needs to be flexible for your lifestyle.
For more information on creating a budget, download Budgeting Made Easy.
By: Kathryn Katz
About the Author:
Kathryn Katz, Consolidated Credit Counseling Services Consolidated Credit Counseling Services is a 15-year old company that assists families throughout the United States in ending financial hardships through financial education, credit counseling and debt management programs. Kathryn Katz has over 10 years web copywriting experience and a life-time love of helping others. She was formally the Director of Financial Education at a non-profit credit counseling agency. At an early age, she learned the importance of volunteerism by joining the Girl Scouts and actively participating in her youth group. As an adult, she has helped raised funds for Susan G. Komen, Rescue Rehab Home, Toys for Tots and Women in Distress.
Silva Dewire
Budgeting Your Way Out of Debt and Credit Problems
If you’re unhappy with your financial situation, a personal budget could be the key to resolving your problems and getting back on track. Most people cringe at the words “personal budget,” and hardly anyone looks forward to creating and using a budget. However, once you start and use a budget, you’ll be amazed at the change in your financial life.
As you look over your finances, particularly if you’re struggling with debt and having difficulty just stretching your paycheck until the end of the month, you may feel it’s hopeless. But by budgeting carefully, you can, and will, create a positive financial situation out of what looks like chaos.
To start your budget, go through your most recent credit card and bank statements and list the categories you spend money on. These include necessities like rent or mortgage and food. They also include other categories like entertainment and personal purchases like books or music. At this point, simply list each category.
Next, figure out how much you are currently spending on each category. Just get this down on paper so you can look at it honestly. The most important part of creating a budget is knowing your current situation. Taking an honest look at the way things are helps you create what you want.
List all of your categories again, on a new sheet of paper or in a new spreadsheet or document. Now, determine a new amount for that category, based on the money you actually have coming in each month. The bottom line on your budget must be equal to, or less than, your monthly income. From this point on, you’re going to concentrate on living within your means and paying off your debt.
If your budget comes out over your monthly income, you’ll need to make adjustments in non-essential areas to make it fit. Keep in mind that you need to live within your means, but you also need to live. Do not completely zero out categories like entertainment; just reduce those categories. Don’t deprive yourself entirely of pleasant things, because you’ll never stick to a budget like that.
A good budget covers all of your essential spending, pays back debt, and allows you to have a comfortable life. Of course, comfortable in this sense may be relative, compared to what many people have when they live on credit, but you should be able to enjoy your life on a budget.
Once you’ve created a budget, it is essential that you consult it and live within it. This may be difficult at first. Many people find that the easiest way is to put cash in envelopes for each category. When the cash is gone, that category is finished for the month. Others just record their spending in relation to their budget.
Your first month living on a strict budget may be very challenging, and you may have the occasional slip off-budget. When this happens, just return to living within your budget and keep going. After one month, it should be much easier to consult and work with your budget, and you should find the process more natural.
Don’t let setbacks overwhelm you. Set your budget, do your best to live within it, and build your ability to stick to your budget over time. Within months, you will see a great difference in your financial situation.
By: Brian Higdon
About the Author:
As you look over your finances, particularly if you’re struggling with debt and having difficulty just stretching your paycheck until the end of the month, you may feel it’s hopeless. But by budgeting carefully, you can, and will, create a positive financial situation out of what looks like chaos.
To start your budget, go through your most recent credit card and bank statements and list the categories you spend money on. These include necessities like rent or mortgage and food. They also include other categories like entertainment and personal purchases like books or music. At this point, simply list each category.
Next, figure out how much you are currently spending on each category. Just get this down on paper so you can look at it honestly. The most important part of creating a budget is knowing your current situation. Taking an honest look at the way things are helps you create what you want.
List all of your categories again, on a new sheet of paper or in a new spreadsheet or document. Now, determine a new amount for that category, based on the money you actually have coming in each month. The bottom line on your budget must be equal to, or less than, your monthly income. From this point on, you’re going to concentrate on living within your means and paying off your debt.
If your budget comes out over your monthly income, you’ll need to make adjustments in non-essential areas to make it fit. Keep in mind that you need to live within your means, but you also need to live. Do not completely zero out categories like entertainment; just reduce those categories. Don’t deprive yourself entirely of pleasant things, because you’ll never stick to a budget like that.
A good budget covers all of your essential spending, pays back debt, and allows you to have a comfortable life. Of course, comfortable in this sense may be relative, compared to what many people have when they live on credit, but you should be able to enjoy your life on a budget.
Once you’ve created a budget, it is essential that you consult it and live within it. This may be difficult at first. Many people find that the easiest way is to put cash in envelopes for each category. When the cash is gone, that category is finished for the month. Others just record their spending in relation to their budget.
Your first month living on a strict budget may be very challenging, and you may have the occasional slip off-budget. When this happens, just return to living within your budget and keep going. After one month, it should be much easier to consult and work with your budget, and you should find the process more natural.
Don’t let setbacks overwhelm you. Set your budget, do your best to live within it, and build your ability to stick to your budget over time. Within months, you will see a great difference in your financial situation.
By: Brian Higdon
About the Author:
Read e-zine, While The Sun Shines every day for the latest news on health, wealth, success and real estate.
Don’t let the sun go down on today’s opportunity!!
Johnny Wollschlager
Budgeting For Interest Rate Rises
On Wednesday April 4, the Reserve Bank of Australia (RBA) decided leave the official cash rate on hold at 6.25%, saving homeowners the much anticipated 0.25% increase in variable mortgage rates. Many analysts are tipping the RBA is waiting on official March inflation rates before deciding on any increase and believe an increase is likely in May.
www.news.com.au stated that “Higher rates are forcing people into financial hardship with a survey by NEWS.com.au and Coredata released today revealing almost one in three Australians would be forced to sell their home if interest rates rose by 1 per cent.”
Furthermore, “Of property investors, 44 per cent said a 1 per cent rate rise would force them to sell their properties as mortgage costs got too much to service.”
Take the following mortgage and see what happens when interest rates increase:
Current situation
Loan amount$400,000
Interest rate7.99%
Loan term25 years
Weekly minimum repayment$711
Total interest payable over 25 years$524,642
0.25% interest rate rise
- Weekly minimum repayments will increase to $727
- Total interest payable over 25 years will increase to $544,588 – that’s another $19,946!
- Additional amount required per annum to satisfy minimum repayment requirements will be $812
0.50% interest rate rise
- Weekly minimum repayments will increase to $742
- Total interest payable over 25 years will increase to $564,706 – that’s another $40,064!
- Additional amount required per annum to satisfy minimum repayment requirements will be $1,616
1.00% interest rate rise
- Weekly minimum repayments will increase to $773
- Total interest payable over 25 years will increase to $605,445 – that’s another $80,803!
- Additional amount required per annum to satisfy minimum repayment requirements will be $3,246
The Sunday Herald Sun reported on April 8 that “Battling families are using their credit cards to pay their mortgages in last ditch efforts to save their homes.” reporting one family that has accumulated approximately $160,000 in credit card debt on eight credit cards and that “charities and financial counsellors say there are thousands more – many just one interest rate rise from losing their homes.”
All this talk about interest rate rises and the impact it is having on homeowners enforces the important of staying in control of your finances. Applying additional amounts to the mortgage repayments means families will need to cut back on other areas of spending to avoid the trap of financing their lives via credit cards which attract interest rates of approximately 20% p.a..
The best way to stay in control of your finances is to ensure you regularly complete a budget. Budgeting is the key to understanding how much you are spending and where you are spending your money – this is the first step to being able to save money.
By regularly completing a budget you regularly understand where and how you plan to spend your money over the coming period. That way you can determine which areas of your spending can be better managed i.e. where you can save money which can be applied to those additional mortgage repayments.
For those people who struggle with budgeting or don’t know where to start when it comes to budgeting, www.easy-budgeting.com can help.
www.easy-budgeting.com has made the process of budgeting easy and possible for everyone. The web site offers a simple and easy to use 12 month budget model created in Microsoft Excel. You don’t need to be a computer wizard or an Excel expert, you just need to have the desire to control your finances.
The main feature of the 12 month budget model provided by www.easy-budgeting.com is the ability of the user to budget an income or expense item by completing just 3 easy steps. The user simply selects the start month, the frequency and the amount of the income and/or expense and the data for the 12 months is automatically generated based on the parameters selected.
After completing the budget and reviewing the 12 month summary and the expenses graph, users can easily determine where their money is being spent and where cut backs are possible. The budgeting process will help you identify your problem areas, take control of your spending and ensure you are better prepared to manage those inevitable interest rate rises. If completed regularly, budgeting will become second nature and you’ll find that your money will go further and work harder for you and your family.
Visit www.easy-budgeting.com for more information on the 12 month budget model.
By: Rhys Campbell
About the Author:
www.news.com.au stated that “Higher rates are forcing people into financial hardship with a survey by NEWS.com.au and Coredata released today revealing almost one in three Australians would be forced to sell their home if interest rates rose by 1 per cent.”
Furthermore, “Of property investors, 44 per cent said a 1 per cent rate rise would force them to sell their properties as mortgage costs got too much to service.”
Take the following mortgage and see what happens when interest rates increase:
Current situation
Loan amount$400,000
Interest rate7.99%
Loan term25 years
Weekly minimum repayment$711
Total interest payable over 25 years$524,642
0.25% interest rate rise
- Weekly minimum repayments will increase to $727
- Total interest payable over 25 years will increase to $544,588 – that’s another $19,946!
- Additional amount required per annum to satisfy minimum repayment requirements will be $812
0.50% interest rate rise
- Weekly minimum repayments will increase to $742
- Total interest payable over 25 years will increase to $564,706 – that’s another $40,064!
- Additional amount required per annum to satisfy minimum repayment requirements will be $1,616
1.00% interest rate rise
- Weekly minimum repayments will increase to $773
- Total interest payable over 25 years will increase to $605,445 – that’s another $80,803!
- Additional amount required per annum to satisfy minimum repayment requirements will be $3,246
The Sunday Herald Sun reported on April 8 that “Battling families are using their credit cards to pay their mortgages in last ditch efforts to save their homes.” reporting one family that has accumulated approximately $160,000 in credit card debt on eight credit cards and that “charities and financial counsellors say there are thousands more – many just one interest rate rise from losing their homes.”
All this talk about interest rate rises and the impact it is having on homeowners enforces the important of staying in control of your finances. Applying additional amounts to the mortgage repayments means families will need to cut back on other areas of spending to avoid the trap of financing their lives via credit cards which attract interest rates of approximately 20% p.a..
The best way to stay in control of your finances is to ensure you regularly complete a budget. Budgeting is the key to understanding how much you are spending and where you are spending your money – this is the first step to being able to save money.
By regularly completing a budget you regularly understand where and how you plan to spend your money over the coming period. That way you can determine which areas of your spending can be better managed i.e. where you can save money which can be applied to those additional mortgage repayments.
For those people who struggle with budgeting or don’t know where to start when it comes to budgeting, www.easy-budgeting.com can help.
www.easy-budgeting.com has made the process of budgeting easy and possible for everyone. The web site offers a simple and easy to use 12 month budget model created in Microsoft Excel. You don’t need to be a computer wizard or an Excel expert, you just need to have the desire to control your finances.
The main feature of the 12 month budget model provided by www.easy-budgeting.com is the ability of the user to budget an income or expense item by completing just 3 easy steps. The user simply selects the start month, the frequency and the amount of the income and/or expense and the data for the 12 months is automatically generated based on the parameters selected.
After completing the budget and reviewing the 12 month summary and the expenses graph, users can easily determine where their money is being spent and where cut backs are possible. The budgeting process will help you identify your problem areas, take control of your spending and ensure you are better prepared to manage those inevitable interest rate rises. If completed regularly, budgeting will become second nature and you’ll find that your money will go further and work harder for you and your family.
Visit www.easy-budgeting.com for more information on the 12 month budget model.
By: Rhys Campbell
About the Author:
Rhys Campbell is a qualified Chartered Accountant residing in Australia, with over 16 years experience in the finance / commerce industry worldwide. http://www.easy-budgeting.com
Clint Mcgrain
Top Tips on How to Budget Your Money
Now more than ever is the importance of budgeting your money a must in today’s economy. The most important thing to remember when forming your budget is attitude. It is essentially up to you whether you follow your budget or not therefore by having a good attitude towards achieving your financial goals is imperative to your success. Budgeting your money allows you to save up for things that mean something to you. However, if you view budgeting in a negative light there is no way that you are going to be able to achieve what you want. Using your attitude to further promote your goals through efforts of saving and accruing will enable you achieve these goals quicker and easier. Now that you have instilled your attitude to enforce your ability to save you are equipped the right reasoning to go forward with your budget.
Now that you have had an attitude adjustment, you must remember to customize your budget to fix your needs and wants. For if you take on a general approach you get lost in the notions that others live by instead of your own. For every person has different incomes, bills, and expenses so there is no way a general budget could work. However you can use general guidelines based on percentages for the amount of money that should be distributed to rent, food, and entertainment. For a budget shows you where you place your importance and allows you to see where more funding must be placed in order to reach your financial goals. If you do not have planned financial goals there is no way you are going to be able to save up for something that is important to you. Make sure that before you start a budget you know what direction you want to go. Planned financial goals will help to eliminate impulse spending.
Setting up a proper budget that is customized to your needs and wants will allow you to see where your money is going. In seeing the real allocation of your money, you may determine that they way you are living your life needs a much needed adjustment. Or you may realize that you are so close to your goals that you might want to adjust it so that you achieve your goals quicker. Whatever the case may be looking towards the future is a great approach to take when trying to determine where you want to be down the road. In order to get to where you want to go in life it takes planning. In setting up a proper budget you are on your way to achieving all of your financial goals with ease. Make sure that you are not sacrificing too much for you may become stressed causing your attitude to slip back where it once was. Saving money is a great way to see how you are able to manage your money with out any other extraneous factors.
By: Jeff Nelson
About the Author:
Now that you have had an attitude adjustment, you must remember to customize your budget to fix your needs and wants. For if you take on a general approach you get lost in the notions that others live by instead of your own. For every person has different incomes, bills, and expenses so there is no way a general budget could work. However you can use general guidelines based on percentages for the amount of money that should be distributed to rent, food, and entertainment. For a budget shows you where you place your importance and allows you to see where more funding must be placed in order to reach your financial goals. If you do not have planned financial goals there is no way you are going to be able to save up for something that is important to you. Make sure that before you start a budget you know what direction you want to go. Planned financial goals will help to eliminate impulse spending.
Setting up a proper budget that is customized to your needs and wants will allow you to see where your money is going. In seeing the real allocation of your money, you may determine that they way you are living your life needs a much needed adjustment. Or you may realize that you are so close to your goals that you might want to adjust it so that you achieve your goals quicker. Whatever the case may be looking towards the future is a great approach to take when trying to determine where you want to be down the road. In order to get to where you want to go in life it takes planning. In setting up a proper budget you are on your way to achieving all of your financial goals with ease. Make sure that you are not sacrificing too much for you may become stressed causing your attitude to slip back where it once was. Saving money is a great way to see how you are able to manage your money with out any other extraneous factors.
By: Jeff Nelson
About the Author:
Jeff Nelson gives advice on money management. His advice helps you to eliminate your debt faster. To make online budgeting easy and set up your Budget for each category you are targeting, visit www.mint.com
Mikki Rogal
Budgeting Money 101 – Getting Started With a Personal Budget
Does cash just seem to slip through your fingers? Tired of eating nothing but noodles for three days before that next paycheck? For some, budgeting money seems natural. For most of us, it is about as much fun as a paper cut. While it may not be enjoyable, budgeting money is one of life’s skills that once mastered, will reap rewards.
Income versus Expenses
When the subject of income comes up, most people know down to the penny how much they make in an hour, a month, or a year. Even those who work on tips will tell you within a few dollars, what an average night brings in. But somehow, when it comes to where that money goes, things get fuzzy. Expenses are slippery. The only way to get a grip on budgeting money is to record and examine expenses. Dull? Yes. Do it anyway. Analyze three months of expenses minimum. One year is better.
Predictable Patterns
People are creatures of habit. That might mean a weekly movie, football night at the sports bar or a haircut every other Wednesday. Learn where your patterns fall. Add up what they cost. Budgeting money starts to boil down to comparing income against needs and making conscious decisions. Once you begin to understand your personal patterns, changes can be made.
Making Mistakes
It’s inevitable. If you are human, at some point a financial error will be made. Part of budgeting money is recognizing that soon or later, you will goof up. It can happen on either the income side of the equation or on the expenses side. It matters not. What does matter is whether you prepare for a slipup by having a small amount of cash set aside. Raid this fund for a midnight pizza run or that really cool new game and it won’t work. Budgeting money also means choosing to behave responsibly.
Tips and Tricks
Just like taxes that come out of a paycheck, money that you don’t see can’t be spent. Use direct deposit to make contributions to savings or retirement funds. Don’t carry large amounts of cash. It’s more difficult to accurately track expenses and spending patterns unless there’s a paper trail. Set aside time once a week to review whether you’re on track to pay every bill on time for the month. If not, make adjustments. Budgeting money is about not getting painted into a corner.
Payoffs
Ever wonder who qualifies for the best loan rates on things like cars, homes and credit cards? It’s the people with good credit. Those who have mastered the art of budgeting money are never late paying bills, live within their means, and prove they can be trusted to use credit wisely. Being wealthy is not required. Being smart with budgeting money is.
It’s never too late to become an expert at budgeting money. All it takes is the discipline to carefully monitor expenses compared to income, make informed choices and have a little savings for the normal mistakes we all make. With practice, budgeting money is like brushing your teeth. Just a good habit.
By: alex wilson
About the Author:
Income versus Expenses
When the subject of income comes up, most people know down to the penny how much they make in an hour, a month, or a year. Even those who work on tips will tell you within a few dollars, what an average night brings in. But somehow, when it comes to where that money goes, things get fuzzy. Expenses are slippery. The only way to get a grip on budgeting money is to record and examine expenses. Dull? Yes. Do it anyway. Analyze three months of expenses minimum. One year is better.
Predictable Patterns
People are creatures of habit. That might mean a weekly movie, football night at the sports bar or a haircut every other Wednesday. Learn where your patterns fall. Add up what they cost. Budgeting money starts to boil down to comparing income against needs and making conscious decisions. Once you begin to understand your personal patterns, changes can be made.
Making Mistakes
It’s inevitable. If you are human, at some point a financial error will be made. Part of budgeting money is recognizing that soon or later, you will goof up. It can happen on either the income side of the equation or on the expenses side. It matters not. What does matter is whether you prepare for a slipup by having a small amount of cash set aside. Raid this fund for a midnight pizza run or that really cool new game and it won’t work. Budgeting money also means choosing to behave responsibly.
Tips and Tricks
Just like taxes that come out of a paycheck, money that you don’t see can’t be spent. Use direct deposit to make contributions to savings or retirement funds. Don’t carry large amounts of cash. It’s more difficult to accurately track expenses and spending patterns unless there’s a paper trail. Set aside time once a week to review whether you’re on track to pay every bill on time for the month. If not, make adjustments. Budgeting money is about not getting painted into a corner.
Payoffs
Ever wonder who qualifies for the best loan rates on things like cars, homes and credit cards? It’s the people with good credit. Those who have mastered the art of budgeting money are never late paying bills, live within their means, and prove they can be trusted to use credit wisely. Being wealthy is not required. Being smart with budgeting money is.
It’s never too late to become an expert at budgeting money. All it takes is the discipline to carefully monitor expenses compared to income, make informed choices and have a little savings for the normal mistakes we all make. With practice, budgeting money is like brushing your teeth. Just a good habit.
By: alex wilson
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Maximize your household budget with easy budgeting tips. Our personal finance budgeting tips and money saving tips will help you to spend less, save more and enhance your quality of life
Jared Holliday