- 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.

In almost all companies there are really two categories, expense and income. Under your expenses category there could be several smaller sub-categories most often falling within two areas uncontrollable and controllable expenses .For more details visit to www.the-forum-list.com. While most small business owners claim that they have control over all expenses involved in their campaign, they are just burying there heads in the sand as some costs such as rent, utility cost, and other fixed costs can change, without any control by the owner.

Some other expenses like insurance, payroll, advertising and promotion can be subjected to a budget and are considered to be a controllable expense. If the company begins to slip off, you can try to control a few of these expenses by sending home staff and cutting spending on promotion and advertising.

Depending on the sustainability of your company if the business is going through a bad spell it often is a good investment to take the bull by the horn and pay employee salaries, continue to provide a good service to the balance of the remaining loyal customers until business is back on its feet. It might be hard to pay staff but by trying to do all the work yourself not only will you quickly burn out , and if no one is handling the customers it wont be long before there are no clients left to take care of.

There are normally a couple of ways you can budget your companies money and that is through percentage of income and set dollar amount. Many companies will try to budget their controllable expense by dollars and non-controllable by percentage of income .For more information logon to www.sell-using-the-web.com. It goes without saying that a great part of the owners’ time will be spent towards bring money and new customers to the company and how much they have budgeted on controllable expense will directly related to income.

An example is, a business earning $200,000 per month in income who has budgeted of six percent for wages, providing $12000 for salaries. If the salaries level increases to $500,000 the budgeted salary percent does not change but the money available for wages climbs to $30,000 with the aim to increase sales and business profits, the business owner might probably need the extra assistance to help take care of company.

There are other types’ expenses like Social taxes paid by employers can also end up into the payroll account also workers’ compensation charges and paid leave time or other bonuses that might be given by the company. Although budgets could be very difficult to calculate for new companies, it is necessary for all small business entrepreneurs. If you would like to know more check the link below to get a free copy of “Dotcomology” the art of making money on the internet.

Rocket Scientists would never begin construction on a new booster rocket without a detailed set of design specifications. Yet most of us go blindly out into the world without an inkling of an idea about finances and without any plan at all.

Not very smart of us, is it?

A money plan is called a budget and it is crucial to get us to our desired financial goals.

Without a plan we will drift without direction and end up marooned on a distant financial reef.

If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are…long term and short term.

Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.

A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.

Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in “free budget forms”.

You’ll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it’s something you can stick to.

Step 8. Investigation. In some cases, the explanation cannot be filled in by the budget review meeting, because the person or depart¬ment preparing the review (usually accounting) does not know the answer. At that point, an investigation is in order. It might be possible to assign the problem to one department, or it might be necessary to ask each manager to look into individual budget assumptions to identify the components of the variance.
Investigation is troublesome on a companywide basis. No one will want to take responsibility for explaining the variance, or for looking into it. As an unfortunate consequence, the accounting department ends up with the lion’s share of budget-reporting duty. This means that, with or without your knowledge, your department could be criticized for a budgeting problem, even if you had nothing to do with developing that budget.

Step 9. Response. Once investigation is complete, some form of response is demanded. If an expense is running above a reasonable budget level, it should be brought under control. If the problem is strictly in one department, assignment of response is simple. How¬ever, it is more often a companywide problem and, again, no one will want to tackle the problem. So the accounting department again is given the responsibility and the power to respond and to solve. The power issue wouldn’t be a problem in itself, except for the fact that you should want to control and answer for your own budget.

Step 10. Review. Once a problem is discovered and the process of correction is entered into, the review process begins. This is a year-¬round, never-ending, ongoing effort, one that should be instituted as a daily priority and as part of your routine. The idea of monitoring the budget is too often delegated, or thought of as an unpleasant and inconvenient demand on our time. Think of the control and review process not as manipulation of rows and columns of numbers, but as real and tangible events and financial consequences-that you can and should control as part of your job.

There are a number of steps you can take to achieve the benefits intended from the budgeting process, and you will see tangible results at once:
• Respond to discovered variances. When you discover that an account in your department has a significant variance, take immediate action. Identify the cause of the problem and fix it. If the variance is significant in either direction, it deserves a careful look. And when you find the answer, your task has just begun. From there, you need to decide what actions are appropriate; then you need to follow through and take those actions.
• Build control ideas into assumptions. If you think of budget¬ing as a function outside what you actually do, then you have missed the point. In fact, budgeting should be (but rarely is) an ongoing exercise in control.Typically, the budget comes up only at the end of the month, when a variance report is prepared; or at the end of the fiscal year, when you’re reminded that, once again, it’s time to stay late and start filling out worksheets. But suppose you have a problem keeping expenses down, so you correct the problem. The budget assumption for that expense category might be the logical starting point for getting your accounts under control, assuming your control ideas work.
• Modify to correct, not to avoid problems. Unfortunately, budgeting priorities might prevent you from achieving this. How should you respond? Get in there and solve the problem. If the budget is reasonable but employees are spending more than they should, put a preapproval system in place. If the budget is simply wrong and the spending level is right, document that fact as part of your explanation. In either case, don’t let the problem go. And don’t complicate the real reasons for the problem by providing an accept¬able answer that doesn’t really say anything. That only prevents anyone from knowing what should be done.

Step 5. Budget. The cost and expense budget is based on intelli¬gent assumptions related to the nature of the category. But in addi¬tion, the budgets will be directly affected by sales levels and timing. For example, if you believe that the summer months will experience a much higher than average sales volume, then it makes little sense to spread operating and variable expenses evenly throughout the year. You will then have timing differences in your budget. While these may not be major problems, they do cloud the important issues, often hiding real unfavorable variances from view.
Often overlooked in the budgeting process is the importance of cash-flow projections. Once you have completed a sales forecast and cost and expense budgets, you should next develop the year’s cash-¬flow projection, as part of the test to see whether the plan will work. What could go wrong? Cash flow will be affected by any number of situations. For example, what if you need to invest in capital assets? What if the new sales volume occurs on account, but related costs and expenses must be paid monthly? What if your inventory level has to be doubled in the first quarter? All these events will demand addi¬tional capital. You need to ensure that you know where that capital will come from.

Step 6. Monthly review. This is a process of comparing actual to budgeted outcomes. The review should involve sales forecasts, cost and expense budgets, and cash-flow projections. Without the monthly review, you are not going through the budgeting process at all. Instead, you’re letting the effort go to waste. Only by looking at the numbers can you tell whether the plan is working.
The review can be simplified to a great degree. This is most desirable. You don’t want to keep a room full of busy managers and executives sitting for hours while going through a large volume of detail. All you need is a report showing each category in three columns: actual, budgeted, and the variance. If the variance is minor, no action is required. But if the variance is unacceptable, proceed to the next step.

The second step is the monthly review. The budget becomes worthwhile only when the managers of each department sit down together and review the budget in the light of what actually hap¬pened in all the revenue, cost, and expense categories. In this review, any variances are highlighted and explained.
The third step is the follow-up action that is taken when an unacceptable variance is discovered. This is the most critical step of all; it is where the real profits are maintained and created.

That is the budgeting process in overview. A more detailed, step¬ by-step explanation is given below:

Step 1. Plan. A properly prepared budget grows from a well¬ defined business and marketing plan. Without a plan, the organiza¬tion lacks direction. And without direction, the budget will be arbitrary.
The plan explains the current year’s marketing goals. The fore¬cast and budget are the financial expression of those goals, and they demonstrate that the goals are practical and can be achieved. The plan does not suggest that the numbers will fall exactly as shown, or even close. It does show that the plan is realistic and that it can be achieved. The numbers work.

Step 2. Goals. Setting goals as part of the plan is a logical and necessary step in the budgeting process. We should keep in mind that, in spite of the way things were done in the past, the worksheets, filled with numbers are only part of the whole. Those columns and rows should represent the financial expression-and realization-of clearly stated goals.

Step 3. Assumptions. The key to budgeting is developing intel¬ligent assumptions. For example, a sales forecast makes sense only when broken down by its component parts. So for example, if sales are generated by salespeople in the field, it makes sense to forecast based on assumptions about recruiting, attrition, and average pro¬duction. Expense budgets should be developed based on the components that logically constitute each category. The variable expense groups may vary with sales activity; overhead expenses are developed according to some logical pattern. Abandon the usual base for budgeting: percentage increases spread evenly throughout the year. These are useless to a need for analysis that will arise later in the year.
It also makes no sense to use the past, especially if the budget didn’t work. Ask yourself, if last year’s expenses exceeded budget, why are you using that outcome as the basis for the coming year? That’s building in excessive expenses rather than creating controls to reduce the spending level.