Blackhillsams

In these tough financial times, more and more businesses fall into financial despair and need extra funding in this bad economy. Many of these businesses could change their financial position somewhat by focusing on their budget and cutting it THE BONE.

The first step to take, which is the easiest and fastest, is to cut out that unnecessary spending.

At first glance, you might think that your budget is very tight and there is nothing in there to cut. As a business owner and financial consultant for over 20 years, I have found that this is seldom the case. There are almost always ways to cut costs and save money.

A big mistake most businesses make is not taking the time to prepare a budget when times are good. Typically business owners tend to take an interest into budgeting money once they’re in financial trouble. Their debts have piled up, their income doesn’t seem to cover their bills and habits, and they are stressed out as a result. Does this sound familiar? If so, you probably need to learn the usual budgeting techniques.  

Budgeting and financial planning are the cornerstones of responsible money management. Not only that, but they are vital in developing a workable plan for the future, and can even reduce stress. While many businesses shy away from the accountability and responsibility required to create and maintain an accurate budget, buckling down and building a budget can ultimately help reduce stress and worry, and lead to a more pleasant and fulfilling life.

Before getting started, it’s important to define what a budget is, and what it is not. It is not just a list of where your money goes each month. A budget is a comprehensive overall picture of your financial situation where money comes in, where it goes out, and what it’s spent on. A budget is a plan, a map of the financial future. It should include salaries, bonuses, bills, insurance, savings, and other expenditures. It should be divided into wants and needs and should be organized as a line-item list, with each item

categorized and accounted for.

Most importantly, a budget should be accurate. Creating a budget that is inaccurate is a complete waste of time. People often create budgets that reflect where they want to be financially, or that ignore certain one-time-only expenditure this is not going to be effective. Instead of focusing on where you want to be and fudging the lines of where you are, make your budget an accurate and honest reflection of your current economic situation. Once you have that in place, you will be able to more easily identify where changes can and should be made, and you can begin to transform your financial situation by spending and saving responsibly.

Just as a budget should be honest and accurate, it should also be flexible. While, whenever possible, we try to plan for the unexpected, it is a fact of life that there will be times you need to go beyond your budget, a financial crisis, for example. This is understandable, and does not indicate some failure on your part to plan. In such situations, simply keep account of your spending and adjust your budget for subsequent months, where possible, to make up for the extra expenditures.

The most important thing to remember about a budget is that it is a living, breathing thing “well, not really, but it should be treated as such. A budget will do you no good if you create it then put it aside and never look at it again. A budget should be updated monthly and kept on hand for quick reference and revision. Keeping your budget up to date will allow you to see not only where you are financially, but will help you see how to get where you’d like to be.

Creating an accurate budget is important not only because it helps you see where you are financially, but also helps you map out the road to where you’d like to be.

What makes up a good budget? What expenses should you include in the budget? What can you do about variable expenses in your budget? How can you personalize a budget?

Where are you going?

The key to a good budget or spending plan is knowing where you have been and where you want to go. Knowing where you have been is done by insuring you have written down where all you money has been going. You can find this information by categorizing and reviewing your last 6 months of check registers or other accounting methods you have been employing. If you have no such method in place, you have just uncovered your main budgeting problem which is the first item to be corrected.

If on the other hand you use a check register or other means but have numerous general entries such as “cash” or “miscellaneous” or other unidentifiable labels, this too must be corrected. You MUST know where your money is going before you can divert it. I recommend carrying a small spiral notebook for at least 2 weeks (longer is far better) and recording every cash transaction. You will truly be amazed by what you learn from this experience.

ncerns can be one of the most major sources of arguments for a couple when planning their wedding. The couple may have different concepts about what kind of wedding they desire and also about what they can afford. It is important for the couple to discuss their fiscal limits before the wedding planning goes too far.

The first step is to have a talk on budget constraints before planning the wedding. This ensures that both the bride and the groom are well aware of the finances that should be allocated to the wedding, and not go overboard.

Another tip for setting a budget and sticking to it is to start saving early for your marriage. Putting aside a little of each paycheck for awhile can add up to a large saving that may be used for your wedding. This forward-thinking way of planning and saving will permit you to maximise the budget that is available to you for your marriage planning.

Once the budget has been set, put it aside for a few days and then review it again. This gives time for the couple to accept the budget, and to ensure that they understand it. This is significant because if a partner does not agree with the budget, they might be sure to overspend in one area, leaving the budget in jeopardy. It is also necessary to partition a bit of cash for incidentals to account for little surprising costs.

In building a budget it is advised that both parties be certain about who will be paying for what items. As an example, if the groom’s family offers to pay for the centerpieces and you opt to let them, this will permit you to divert your formerly chosen centerpiece budget to other parts of the wedding. The key to sticking to your marriage budget is to be conscious of who has agreed to pay for what.

It is imperative that budgets for each individual part of the wedding be established to allow you to follow this next tip.

This tip recommends the couple to be aware of their budgets for each individual part of the wedding before negotiating contracts for services. If you know that you have allotted $300 for entertainment you would be sensible to search out a DJ that is offering his services for roughly that amount and then barter your contract to make sure that you remain within the constraints.

Doing as many things as you can on your own is an alternative way to making sure that you are sticking to your financial position. Crafts and homemade invites can greatly reduce the price of your wedding. As an example, making your own favors or centerpieces can seriously cut back your costs and free up further cash for other areas of the wedding.

Another tip for sticking to your budget is to not view the budget as restrictive. Instead, think of the wondrous and creative things you can come up within that budget.

Yet another tip for sticking to your wedding budget is to try a few shops and compare shops for services. A limo company may come strongly recommended but if they are not in your price range, do not hold back; allow them to know why you are going to need to select another company and you can be confounded at how shortly they are prepared to give you a different offer.

A last tip for making and sticking to a budget is to notice that there are sure to be snags along the way. So long as you remain cognizant of your expenditure and realize the implications of your actions, you are probably going to notice that if you go over budget in one area, you will need to change other areas by reducing their total budget.

A wedding budget could be a serious factor for emotional strain on a couple. It is important for them to discuss their finances clearly and sincerely, and create a budget for their wedding plans.

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.

Money Budgeting is a phrase that either bores them too much, or makes them depressed. But, this is how successful people deal with money – they budget. It’s a lesson that must be learned to succeed financially in this life. Here is some helpful information.

Many people are lured into the trap of spending more money each week than they are bringing in and most people are doing this without even realizing it. The main reason this happens is because we are no longer taught or remember how to budget our money. With the introduction of credit, it has become easier to use money that you don’t actually have.

This lack of money budgeting in today’s world is beginning to reach a cataclysm with many families, and individuals who are now finding themselves with severe debt problems and little knowledge about how to turn their bleak situation around.

Even with all of the bad debt write-offs, banks are more than happy with the way things are. Banks build in their own risk factors based on bad debt in their interest rates to give them profit regardless of bad debt write-offs. Simply put, those borrowing money are paying for their inability to budget effectively.

Tips to Effective Money Budgeting:

The basics of budgeting start with you listing incoming money over a period of time, such as a weekly, monthly or fortnightly, then listing the outgoing money, such as mortgage payments, car re-payments, credit cards and so on. Money budgeting also has many other factors used to make it effective, including keeping a constant eye on how your budget is doing and changing it to accommodate unexpected problems without overspending.

Keep all of your receipts and account for what has been spent. Use this to make calculations as to where your money is going and for what. Expenses can be divided into four main categories. These are:

-Housing: mortgage, rent, utilities, property taxes, insurance, etc.

-Work: transport, parking, work clothes, lunches and if you have children, day care

-Living: food, clothing, medication, insurance, etc.

-Personal: entertainment, newspapers, magazines, alcohol, gifts and education, etc.

Once you have categorized all of your bills, take out a blank piece of paper and a calculator. Figure out what is being spent each month on these categories and what can be cut out of the budget to allow more money to go toward bills or improving your financial situation.

Many people get so used to luxuries, they turn these things into fixtures in their weekly, fortnightly or monthly spending habits. By weeding these expenses out or making them a luxury again that is only enjoyed occasionally, you can also save quite a substantial amount of money. When you go through your spending habits, you will be able to calculate how much you are actually spending on these things.

Don’t forget that a contingency fund should always be factored into any money budget. This works out to be around 10 % of your income. A contingency fund will benefit you when you need it the most, such as when you lose your job or have an unexpected expense such as plumbing go wrong in your home. This contingency fund should be kept in a separate savings account and only accessed in emergencies.

Motivation Is The Key:

Motivation is very important when you are budgeting. As an incentive to create a budget and stick to it, remember that the only way to regain wealth is by spending less money than you are receiving. The only way to spend less and do more with your money is to learn how to effectively budget it and stick to your plan.

Once you start to see the benefits of your budgeting and are rewarded with more money in your bank account after you have finished paying out, you will be more encouraged than ever to budget your money.

Another way to teach yourself to budget is to give yourself a solid incentive to stick to it, and make your budget work. You may make it your goal to get your finances in order, so that you can take a vacation or get something that you and your family really wants. Place reminders on your fridge or in your wallet. By doing this, you will be reminding yourself of the reason you have decided to sacrifice some of your luxury spending.

Although this sounds great, when you budget, you will have to learn to set aside any emotions that you may feel toward your budget. Examples of emotions getting in the way and interfering with a well planned budget is when you have to cut out the things that you want, such as weekend breaks away, toys for your children or new furniture, for a while, until you have arranged your finances for the better better.

If you have a family, try to keep them involved in your money budgeting and where the budget needs to be tightened to benefit everyone to exclude non-essentials, explain to family members why budgeting is important. This will help to educate those around you about the importance of budgeting and how budgeting can help you all obtain the things that you want, such as luxuries, without them being a financial burden.

Another trap many people fall into is getting into the habit of ‘keeping up with the Jones’ regardless of their own personal financial situations. After all, money budgeting is about your personal set of circumstances and your personal finances, not someone else’s. Just because your neighbors have just bought the latest model car or had cable television installed, doesn’t mean that you have to, pay attention to your budget and let it be your decider on whether you can afford the things that you want.

Budgeting is a vital skill needed to control your finances and avoid getting into serious debt. By educating yourself on how to budget effectively, taking the time to carefully plan a good budget and monitoring it regularly you will be able to keep yourself and your family encouraged to stick with it.

Set achievable goals and even though, at first, money budgeting may seem tough, it is the only way to have the things that you want, as well as a secure financial future.

I can still remember my first lecture in Management Accounting. The lecturer was introducing us to the concept of budgeting and at the end he made a little joke, which went something like this: “If your budget has turned out exactly right, you have either had an amazing stroke of luck or got it wrong!” Of course, what he meant was: budgets are not meant to be accurate. They are there as a guide – an important, essential guide that should act as both a planning and control mechanism.

I try to avoid the word budget with my new clients but I would like to introduce you to the real meaning of budgeting. Forget about the concept of restriction and restraint often associated with household budgets and start thinking about your finances in the same way that good businesses do.

The glue that holds all successful business practices together is the master budget. It ties in all facets of the business – marketing, selling, financing, research and development, and personnel management. Without a good master budget that incorporates all activities of a business, an organisation will end up floundering. And a floundering business is rarely profitable.

The budget provides the cohesion between the differing objectives of diverse parts of the business and creates a unified goal for the total organisation to work towards. It enhances motivation, delegates responsibility and provides important feedback on the progress of individuals and the organisation as a whole. Not bad, for a simple system that we all thought someone installed to punish us for our mistakes.

Budgets are not punishment. They are important, useful tools that guide us to where we want to go. They allow us to plan for our future yet control our circumstances along the way. They are not meant to be exact, but rather flexible and accommodating. They should change when we change, but still be resilient enough to prevent us from going off the rails. They point us in the right direction and correct us when we fail. Without a budget for our finances, we are trying to win the 100-yard dash blindfolded.  Read more...