Transcript No Slide Title

Budgeting and Cash Flow Management
Objectives
• Describe the relationship between financial
planning and budgeting.
• Understand how to set and achieve longand short-term financial goals.
• Establish the structural and mechanical
aspects appropriate for your personal
budget.
Objectives
• Resolve conflicting financial needs and
wants.
• Describe the key aspects of the
implementation phase of budgeting.
• Illustrate the methods and techniques to
keep income and expenditures within
planned budget totals.
Objectives
• Perform the tasks of the evaluation phase
of budgeting.
• Explain the techniques of talking
effectively about money.
Budgeting and Cash-Flow Management
IF YOU FAIL TO PLAN,
YOU PLAN TO FAIL!
To succeed in money matters requires
implementation of financial plans.
Financial Planning and Budgeting
• Financial planning
• Budgeting
• Values
• Goals
Comparison of Statements
PAST
Income and
Expense
Statement
(Cash Flow
Statement)
PRESENT
FUTURE
Balance
Sheet
Budget
Six Phases of Budgeting
Evaluate
Achieve
success in
financial
goals
Control
Implement
Decide
Organize
Set Goals
Monitor,
review, revise
after each
period.
Financial Goal-Setting Phase of Budgeting
• Setting long-term goals—anything more than 12
months away.
• Developing short-term goals from long-term
goals
• Prioritizing goals
• Making goals time and dollar specific
Organization Phase of Budgeting
• Select recordkeeping format
• Use cash or accrual basis
• Select budget classifications
• Select time periods
Decision-Making Phase of Budgeting
• Inflation and other economic factors
• Realistic budget estimates
• Reconciling initial estimates
Implementation Phase of Budgeting
• Recording actual income/expenditures
• Managing with a cash-flow calendar
• Utilizing a revolving savings fund
• Calculating time-period totals
Control Phase of Budgeting
REASONS FOR BUDGET CONTROLS:
• Stay on target
• Check progress
• Be alert to problems or errors
Control Phase of Budgeting
BUDGET CONTROL MEASURES:
• Use a checking account
• Employ a credit control sheet
• Check accuracy
• Monitor unexpended balances
Control Phase of Budgeting
BUDGET CONTROL MEASURES:
• Justify exceptions
• Use the envelope system
• Employ subordinate budget
Evaluation Phase of Budgeting
• Compare estimated and actual amounts
• Decide how to handle balances
• Assess progress toward goals
Discussions About Money
MONEY MANAGEMENT AND FINANCIAL
DECISION MAKING FOR COUPLES:
• Unilateral
• Shared
• Divided
Discussions About Money
COMPLICATIONS FOR DUAL-EARNER
HOUSEHOLDS:
• More income/more expenses
• Reliance on “second” income
• Discretionary account for each individual
Discussions About Money
COMPLICATIONS BROUGHT BY
REMARRIAGE:
•
•
•
•
Child support
Alimony
His/Her/Our children
His/Her funds
Discussions About Money
EMOTIONS AND MONEY:
• Freedom
• Indifference
• Trust
• Envy
• Self-esteem
• Security/Comfort
• Guilt
• Power/Control
Talking About Financial Matters
• Get to know yourself and partner
• Learn to manage disagreements
• Use “I” not “you” statements
• Focus on commonalties
• Be honest
Develop Money
Sense in Children
• Give access to money
• Give freedom to save and spend
• Teach responsibility
• Allow freedom to fail
• Talk about family finances
Your Personal
Spending Style
• Givers
• Me-spenders
• Big-spenders
• Tightwads
• Normal People
Couples Should Discuss
Personal Finances
• Child bearing
• Employment
• Food and clothing
• Housing and transportation
• Recreation and vacations
• Future security and debt