Transcript • Describe the relationship between financial planning and budgeting. • Understand how to set and achieve long-and shortterm financial goals. • Establish the structural and mechanical.

•
Describe the relationship between financial
planning and budgeting.
•
Understand how to set and achieve long-and shortterm financial goals.
•
Establish the structural and mechanical aspects
appropriate for your personal budget.
•
Create and implement a budget, cash flow
statement, and balance sheet.
IF YOU
FAIL TO PLAN,
YOU PLAN TO FAIL!
To
succeed in money matters requires
implementation of financial plans.
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Financial planning
•
Budgeting
•
Values
•
Goals
1. Personal Financial Records
2. Personal Financial Statements
3. Budget (Spending Plan)
PAST
Income and
Expense
Statement
(Cash Flow
Statement)
PRESENT
FUTURE
Balance
Sheet
Budget
Evaluate
Achieve
success in
financial
goals
Control
Implement
Decide
Organize
Set Goals
Monitor,
review, revise
after each
period.
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Setting long-term goals—anything more than
12 months away.
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Developing short-term goals from long-term
goals
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Prioritizing goals
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Making goals time and dollar specific
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Select recordkeeping format
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Use cash or accrual basis
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Select budget classifications
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Select time periods
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Inflation and other economic factors
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Realistic budget estimates
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Reconciling initial estimates
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Recording actual income/expenditures
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Managing with a cash-flow calendar
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Utilizing a revolving savings fund
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Calculating time-period totals
REASONS FOR BUDGET CONTROLS:
• Stay on target
• Check progress
• Be alert to problems or errors
Only 58%
of young
adults pay
their bills
on time.
National Foundation for
Credit Counseling
BUDGET CONTROL MEASURES:
• Use a checking account
• Employ a credit control sheet
• Check accuracy
• Monitor unexpended balances
BUDGET CONTROL MEASURES:
•
Justify exceptions
•
Use the envelope system
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Employ subordinate budget
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Compare estimated and actual
amounts
•
Decide how to handle balances
•
Assess progress toward goals
Take Home Pay-Net Pay
Discretionary Income-Less than 5% for people under 25
Fixed Expenses
Variable Expenses
Surplus
Deficit
Budget Variance
Emergency Fund